Crosson v. Downingtown Area School Dist.

Decision Date09 October 1970
Citation440 Pa. 468,270 A.2d 377
PartiesHarry S. CROSSON et al., Appellants, v. DOWNINGTOWN AREA SCHOOL DISTRICT et al. Robert WINDLE et al., Appellants, v. DOWNINGTOWN AREA SCHOOL DISTRICT et al. Hein DeJONG et al., Appellants, v. DOWNINGTOWN AREA SCHOOL DISTRICT et al.
CourtPennsylvania Supreme Court

Arthur A. Moorshead, Devon, for appellants.

Theodore O. Rogers, Rogers, Gentry, Windle & Lamb, Susan P. Windle, West Chester, for Downingtown Area School District.

Before BELL, C.J., and JONES, COHEN, EAGEN, O'BRIEN, ROBERTS and POMEROY, JJ.

OPINION

JONES, Justice.

Appellants, (taxpayers)s, in three separate actions in equity in the Court of Common Pleas of Chester County, sought to enjoin appellees, (a third-class school district and its tax collectors), from collecting occupation taxes. The Board of Assessment and Revision of Taxes of Chester County had previously adopted a revised occupational classification and assessment schedule on May 1, 1967. 1 In preparation of its budget for the fiscal year beginning July 1, 1968, the school district used the assessment rolls received from the Chief Assessor of Chester County. A tentative school budget was approved on May 7, 1968, and finally adopted on May 28, 1968. On June 25, 1968, the school district, acting (under authority of the Local Tax Enabling Act, Act of December 31, 1965, P.L. 1257, § 1 et seq., 53 P.S. § 6901 et seq. (Supp.1970)), levied a 500 mill tax on occupations, as assessed by the County. 2 Appellants received their tax bills in the fall of 1968.

Both the tax resolution of the school district as well as the occupational assessments made by the county assessing authorities upon which the tax was levied were attacked by appellants below. As regards the assessments, appellants contended that the tax was invalid because: (1) the assessments were made by the local tax assessors of the various municipalities included within the school district and not by the Chief Assessor of Chester County as required by section 602 of the Fourth to Eighth Class Assessment Law (Act of May 21, 1943, P.L. 571, art. VI, § 602, as amended, 72 P.S. § 5453.602); and (2) it was not levied on the 'Last adjusted valuation' of assessments as required by the Public School Code, (Act of March 10, 1949, P.L. 30, § 677, 24 P.S. § 6--677). As regards the direct challenge to the tax itself, appellants argued: (1) the tax violates the Uniformity Clause of the Pennsylvania Constitution, Article VIII, § 1, P.S., in that minors are exempt; (2) the tax is a disguished income tax and as such violates certain state statutes; and (3) the tax was not assessed and levied within the time provided by statute.

The chancellor, by an adjudication dated May 21, 1969, entered decrees nisi dismissing the complaints. Exceptions to these decrees were dismissed by the court en banc and a final decree entered. These appeals followed.

As to those issues advanced concerning the allegedly improper assessment procedures, the primary issue is one of jurisdiction: whether a court of equity, having jurisdiction and competency to determine the validity of a taxing resolution due to a constitutional challenge, should inquire into the validity of the assessment upon which the resolution was based when there are statutory procedures available to test the allegedly invalid assessment? This Court had occasion to consider this subject in Lynch v. Owen J. Roberts Sch. Dist., 430 Pa. 461, 465, 466, 244 A.2d 1, 3 (1968) wherein we approved the following language in our case law: "The teaching of our case law is that, where the controversy involves a challenge to the constitutional validity of a taxing statute or ordinance, such a controversy falls within the general class of cases wherein equity does have jurisdiction and competency to act. (Citations omitted.)' Studio Theaters, Inc. v City of Washington, 418 Pa. 73, 79, 209 A.2d 802, 805 (1965). See also, Philadelphia Life Ins. Co. v. Commonwealth, 410 Pa. 571, 190 A.2d 111 (1963); Young Men's Christian Assoc. of City of Reading v. City of Reading, 402 Pa. 592, 167 A.2d 469 (1961) (dictum); cf. Blue Cross Appeal, 416 Pa. 574, 209 A.2d 799 (1965). Moreover, that this rule applies even in cases where there is a Specific statutory remedy at law is shown clearly by Studio Theaters. * * * Finally, we note that the equity court, having once obtained jurisdiction because of the presence of a constitutional challenge to a taxing statute, may also dispose, as did the lower court here, of non-constitutional challenges as well.' In Lynch, we found an occupation tax to be invalid as it permitted the school district tax director, rather than the chief county assessor, to value for tax purposes the occupations themselves. There is no such problem involved in the case at bar. In addition, we recently stated: 'what is required to confer jurisdiction on an equity court is the existence of a substantial question of constitutionality (and not a mere allegation) and the absence of an adequate statutory remedy.' Rochester & Pittsburgh Coal Co. v. Board of Assessment and Revision of Taxes of Indiana County, 438 Pa. 506, 508, 266 A.2d 78, 79 (1970). While Lynch demonstrates that a court of equity will determine non-constitutional challenges to a tax resolution even though the constitutional challenge affording jurisdiction and competency is not considered, it does not necessarily follow that equity will consider Every non-constitutional challenge that is collateral to the taxing resolution.

Appellants assert the failure by the county assessing authorities to follow certain procedures as a basis for invalidating the occupation tax. Mauch Chunk Township Taxpayers' Association v. Kern, 339 Pa. 257, 14 A.2d 329 (1940), involved a bill in equity filed by a taxpayers' association directly against the County Board of Revision seeking a preliminary injunction due to the Board's setting aside the assessor's valuation. This Court stated: 'As plaintiffs do not deny the power of the Board to revise and equalize the triennial assessment of their properties, but complain merely of irregularities in its exercise of that power, their bill afforded no jurisdiction for the intervention of a court of equity.' 339 Pa. at 259, 14 A.2d at 330. In Narehood v. Pearson, 374 Pa. 299, 206, 96 A.2d 895, 896 (1953), taxpayers filed a bill in equity to enjoin directly the county commissioners and the county board of assessment 'from proceeding on the assessments' which they averred were illegally and unconstitutionally made, or 'levying any millage or collecting any taxes thereon.' In regard to the taxpayers' contention that equity should take jurisdiction, it was pointed out: 'Where there is an adequate remedy at law in this class of case, this Court has repeatedly said that Equity should intervene only where there is either want of a power to make the assessment or to levy a tax, or the tax is levied without authority of law, or where there is an utter disregard of imperative constitutional requirements: (citations of authorities).' There are no substantial contentions concerning the constitutionality of the assessment 3 or that the Chief County Assessor lacked the power to make an assessment; it is only the irregular exercise of that power which is questioned.

In addition, the legislature has provided an adequate remedy in the form of an appeal from the assessment to the Board of Assessment and Revision of Taxes; the taxpayer can further appeal from the order of the board to the court of common pleas of the county. 4 For these reasons a court of equity should not countenance a direct attack upon the county assessments. We see no logic in allowing the presence of a constitutional challenge to the tax resolution to justify a collateral non-constitutional attack in equity on the assessment. Besides the illogical result that would otherwise occur, there are two very practical reasons for this view. As noted by the chancellor below, 'had this (statutory) avenue of attack been pursued by (the taxpayers), the Chief Assessor and the Board of Assessment and Revision of Taxes would have been afforded the opportunity of defending the actions they had taken and approved.' The opinion of the court en banc also added, 'to now permit (taxpayers) to attack the assessments in question in an action against the school district and its tax collectors is to require (the school district) to defend the actions of another governmental agency over which they have no supervision or control.'

Turning now to those issues properly before this Court concerning the tax resolution itself, appellants first contend that this occupation tax is a disguised income tax exceeding one per cent of their income, in violation of state law. 5 'Occupation taxes are not new. This Court has long recognized the distinction between occupation and income taxes: 'An 'occupation' tax is peculiar in its character. It is not a tax upon property, but upon the pursuit which a man follows in order to acquire property and support his family. It is a tax upon income in the sense only that every other tax is a tax upon income; that is to say, it reduces a man's clear income by the precise amount of the tax. But it is an income tax in no sense.' Banger's Appeal, 109 Pa. 79, 95 (1885). Phillips v. Barnhart, 27 Pa.Super. 26 (1904).' Crawford v. Southern Fulton School District, 431 Pa. 324, 333--334, 246 A.2d 332, 336 (1968). In Banger's Appeal, 109 Pa. 79 (1885), the occupation tax was found to be an income tax as the amount of the tax varied with the amount of income earned by different taxpayers engaged in the same occupation. While appellants contend this factor to be present, the record is barren of any direct correlation. As was stated by one lower court concerning the valuation of an occupation, 'economic return is not the sole measure of the value of an occupation * * *. It is apparent that other factors than...

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