Commonwealth v. Wilkes-Barre and Hazleton Railroad Company

• Decision Date: 03 July 1915
• Docket Number: 10
• Citation: 251 Pa. 6,95 A. 915
• Parties: Commonwealth, Appellant, v. Wilkes-Barre and Hazleton Railroad Company
• Court: Pennsylvania Supreme Court

95 A. 915

251 Pa. 6

Commonwealth, Appellant, v. Wilkes-Barre and Hazleton Railroad Company

No. 10

Supreme Court of Pennsylvania

July 3, 1915

Argued May 24, 1915

Appeal, No. 10, May T., 1915, by plaintiff, from judgment of C.P. Dauphin Co., Commonwealth Docket, 1913, No. 97, for defendant on submission to court without a jury, in case of Commonwealth of Pennsylvania v. Wilkes-Barre and Hazleton Railroad Company. Reversed.

Appeal from settlement of tax on corporate loans by the auditor general and state treasurer. Before KUNKEL, P.J.

The opinion of the Supreme Court states the facts.

The case was tried without a jury under the provisions of the Act of April 22, 1874, P.L. 109. The court entered judgment for defendant. The Commonwealth appealed.

Errors assigned were in dismissing exceptions to various conclusions of law.

The judgment of the court below is reversed and judgment directed to be entered for the Commonwealth in accordance with the agreement of counsel.

Wm. M Hargest, Deputy Attorney General, with him Francis Shunk Brown, Attorney General, for appellant.

Frank M. Eastman, for appellee.

Before BROWN, C.J., MESTREZAT, POTTER, ELKEN, STEWART, MOSCHZISKER and FRAZER, JJ.

OPINION

MR. JUSTICE MESTREZAT:

Defendant is a corporation of the State of New Jersey with general powers to do various acts, including that of holding bonds mortgages, stocks, securities and other evidences of indebtedness of public or private transportation, light, heat, water or power companies. In 1901, the company owned practically the entire capital stock and bonds of the Wilkes-Barre and Hazleton Railroad Company, Lehigh Traction Company and the Wilkes-Barre Terminal Railroad Company, all corporations organized under the laws of this Commonwealth. Defendant issued bonds to the amount of $2,500,000 and assigned the stock and bonds of the above named Pennsylvania companies to the Guaranty Trust Company of New York, to secure the holders of its own bonds. The interest on these bonds was payable by defendant at the office of the trust company in New York City and from 1901 to 1905 inclusive, was paid without deducting the tax on that part of the indebtedness held by residents of Pennsylvania.

During this time defendant kept an office in the State of New Jersey, where its stock transfer books were kept and the annual stockholders' meetings held as required by the laws of that state. No business was done there, nor was any property of the company located in that state. During the period above referred to, the directors' meetings were held in Pennsylvania and its bank account kept here. The treasurer of the company was a resident of Pennsylvania and the interest on bonds and dividends on the stock held by it, were received here by the treasurer and deposited in its bank account and at regular intervals a check or draft was sent to the Guaranty Trust Company of New York, to pay interest due on its obligations. Many of the stockholders and some members of the board of directors of defendant company were nonresidents of this State. The corporation transacts no other business except as a holder and owner of the stock and bonds of the companies heretofore mentioned, and is in effect merely a holding company of Pennsylvania corporations engaged in business in this State. The company has never registered in Pennsylvania.

The question for determination is whether defendant is subject to the tax provided by the Act of June 30, 1885, P.L. 193, 4 Purd. 4544, pl. 28, which requires the treasurer of private corporations "incorporated by and under the laws of this Commonwealth or the laws of any other state or of the United States, and doing business in this Commonwealth, upon payment of any interest on any scrip, bond or certificate of indebtedness issued by said corporation to residents of this Commonwealth" to assess the tax of four mills on the dollar imposed by the Act of June 8, 1891, P.L. 229, 4 Purd. 4532, pl. 1, on all corporate indebtedness, owned or held in this State. In determining this question it is necessary to consider whether defendant is doing business in Pennsylvania within the meaning of that term. The court below held the company was not doing business here and the treasurer therefore was not subject to the provisions of the Act of 1885. Defendant's only business is to hold the capital stock and securities of three Pennsylvania corporations. It maintains its statutory office in New Jersey, but its treasurer resides in Pennsylvania. Its directors' meetings are held here, it keeps a bank account here, receives dividends on securities held by it and transmits from here to a trust company in New York City, money to pay the interest on its corporate securities.

The general rule is that isolated transactions, whether commercial or otherwise, performed in this State by a foreign corporation, do not constitute "doing business" within the meaning of that phrase. In Delaware River Quarry & Construction Company v....