Home Oldsmobile Co., Inc. v. Pine Tp.

• Decision Date: 24 March 1982
• Citation: 65 Pa.Cmwlth. 423,443 A.2d 413
• Parties: HOME OLDSMOBILE COMPANY, INC. et al., Appellants, v. The TOWNSHIP OF PINE, A Political Subdivision of the Commonwealth ofPennsylvania, Appellee. The TOWNSHIP OF PINE, Appellant, v. HOME OLDSMOBILE COMPANY, INC. et al., Appellees.
• Court: Pennsylvania Commonwealth Court

Page 413

443 A.2d 413

65 Pa.Cmwlth. 423

HOME OLDSMOBILE COMPANY, INC. et al., Appellants, v. The TOWNSHIP OF PINE, A Political Subdivision of the

Commonwealth ofPennsylvania, Appellee.

The TOWNSHIP OF PINE, Appellant, v. HOME OLDSMOBILE COMPANY, INC. et al., Appellees.

Commonwealth Court of Pennsylvania.

Argued Oct. 7, 1981.

Decided March 24, 1982.

Henry W. Ewalt, Brooks & Ewalt, Pittsburgh, for appellant in No. 3035 and for appellee in No. 3004.

John R. Luke, Pittsburgh, for appellees in No. 3035 and for appellant in No. 3004.

W. Timothy Barry, Pittsburgh, for appellee in Case No. 3004.

Before MENCER, WILLIAMS and MacPHAIL, JJ.

WILLIAMS, Judge.

This case arose when four licensed automobile dealers (dealers), doing business in Pine Township, Allegheny County, filed a joint suit for a declaratory judgment in the Court of Common Pleas of Allegheny County. ^{1 1} In that action, the dealers sought to have that court declare invalid, or to declare them exempt from, two tax ordinances enacted by Pine Township by authority of The Local Tax Enabling Act (Enabling Act). ² When the Court of Common Pleas entered a final order adverse to their action, the dealers appealed to our Court.

The dealers' appeal (No. 3004 C.D. 1980) is the first of two separate appeals arising from the same tax controversy; and we consolidated the cases for argument and disposition. The second appeal (No. 3035 C.D. 1980) is by Pine Township itself, the defendant in the action below. The Township questions the lower court's assumption of jurisdiction to even consider the merits of the dealers' suit. The Township also seeks a reversal of the lower court's denial of counsel fees.

By two ordinances, both dated April 4, 1979, Pine Township enacted a Mercantile License Tax and a Business Privilege Tax. The taxes became effective as of July 1, 1979. On October 1, 1979, the dealers filed their complaint for a declaratory judgment, challenging the legality of the tax ordinances. The dealers' action also asserted that they are exempt from such taxes as a matter of law.

The dealers' first attack on the validity of the tax ordinances was that the ordinances were enacted during the course of the Township's 1979 fiscal year and after the budget for that year had been adopted. ³ That fact, the dealers asserted, put the ordinances in violation of Sections 902 and 902.2 of The Second Class Township Code. ⁴ The dealers' complaint also averred that the ordinances were not enacted or advertised as required by the Enabling Act; that the taxes imposed are unreasonable, excessive and unneeded; and that the revenues to be derived from the taxes would exceed limitations imposed by law. The complaint further contended that, even if the ordinances were otherwise valid, the dealers are exempt from the taxes because of certain business license fees they have to pay the Commonwealth. ⁵

In response to the dealers' complaint for declaratory relief, the Township filed preliminary objections which raised, inter alia, a question of subject matter jurisdiction. In that regard, the Township asserted that the appeal procedure set forth in Section 6 of the Enabling Act provides the exclusive means of contesting the validity of the tax ordinances; ⁶ and that the dealers' failure to pursue that statutory remedy deprived the lower court of jurisdiction to entertain their tax challenges made by means of a declaratory judgment action.

The Township's preliminary objections also asserted the bar of a non-waivable statute of limitations: that the expiration of the 30-day appeal period prescribed by Section 6 of the Enabling Act terminated the dealers' right to challenge the validity of the tax ordinances. As an additional matter, the preliminary objections raised the defense of laches.

On February 13, 1980, the lower court ruled on the Township's preliminary objections. As to those counts in the dealers' complaint challenging the validity of the tax ordinances, the court ruled that the dealers' failure to sue within the 30-day period prescribed by Section 6 of the Enabling Act debarred the dealers from contesting the validity of the taxes. On that ground, the court ordered the validity counts "stricken." As for the dealers' claim of exemption, the lower court granted the plaintiffs leave to file a more specific complaint within 20 days.

On February 26, 1980, the dealers petitioned the lower court for leave to amend their entire original complaint, and to include therein constitutional challenges to the tax ordinances. Prior to any ruling by the court on that petition, the dealers, on March 4, 1980, proceeded to file an amended complaint. The amended complaint simply repeated the original validity challenges, which had been ordered stricken, and added to them two less-than-specific constitutional assertions. In response, the Township moved to strike the amended complaint, and also moved for a judgment on the pleadings.

On June 11, 1980, the lower court entered an order denying the dealers leave to amend the validity counts of the original complaint. The court's order of June 11th also denied the Township's motion for judgment. Moreover, the court vacated its order of February 13, 1980, and reinstated the dealer's entire original complaint. That is, the lower court decided to hear the entire matter, on the merits, according to the case pleaded in the dealers' original complaint. Thus, the case was put in the same posture it would have been in had the lower court initially overruled the Township's original preliminary objections. The order reinstating the dealers' complaint gave the Township 7 days in which to file an answer to the complaint.

The Township filed a timely answer that included new matter. The new matter incorporated, as affirmative defenses, assertions that had been made in the Township's original preliminary objections: that the lower court lacked subject matter jurisdiction because the dealers had not pursued the statutorily exclusive remedy; that a statute of limitations barred the action; and that the dealers were guilty of laches. The Township also used its new matter to request $10,000 in counsel fees.

On June 26, 1980, the case was tried on the merits before the lower court sitting without a jury. On July 1, 1980, the court entered an order decreeing the tax ordinances valid and denying all relief to the dealers. That order did not mention the Township's prayer for counsel fees. Both sides of the controversy filed exceptions: the dealers contesting the court's decision as to the validity of the taxes; and the Township objecting to the court's failure to award counsel fees.

By an opinion dated July 25, 1980, the lower court set forth the reasons for its July 1st order. That opinion not only reasoned that the dealers' validity challenges lacked substantive merit; the opinion also concluded that the validity challenges were barred by a statute of limitations: the 30-day appeal period prescribed in Section 6 of the Enabling Act.

The court's opinion of July 25th additionally held that the license fees paid by the dealers, to the state, were regulatory in nature and thus provided no basis for a tax exemption. As for the Township's claim for counsel fees, the court stated that no such fees were warranted because the dealers' action was not frivolous.

On October 27, 1980, a court en banc overruled the parties' exceptions; and the appeals to this Court followed.

We are constrained to say that the procedural progress of this case in the lower court was not as orderly as might be desired. Yet, out of that procedural tangle came a decree declaring the tax ordinances valid; meaning that the ordinances were not invalid for the reasons advanced by the dealers. It must be noted that, in their appeal to this Court, the dealers have abandoned their contention that the taxes are "excessive or unreasonable" in a legal sense. Instead, the dealers have continued with only two validity challenges: (1) that the tax ordinances violated the budgetary restrictions in The Second Class Township Code and (2) that the tax ordinances were not advertised in conformity with the Enabling Act. The dealers have also abandoned their exemption claim.

It is our conclusion that the issues preserved by the dealers for our review afford no basis for appellate relief from the lower court's decree.

The dealers' reliance on the budgetary limitations contained in Sections 902 and 902.2 of The Second Class Township Code is meritless, because of Section 5 of the Enabling Act. ⁷ Section 5 of the Enabling Act provides in pertinent part as follows:

Any tax imposed under this act shall not be subject to any limitations under existing laws as to rate or amount or as to the necessity of securing court approval or as to budgetary requirements. Any city, borough or township imposing a tax under this act may revise its budget during any fiscal year by increasing or making additional appropriations from funds to be provided from such tax.

The ordinance or resolution may be passed or adopted prior to the beginning of the fiscal year and prior to the preparation of the budget when desirable.

(Emphasis added.)

Sections 902 and 902.2 of The Second Class Township Code govern the preparation and revision of proposed budgets. Neither provision expresses any relationship between those requirements and a township's power to enact a tax ordinance pursuant to the Enabling Act. However, in Borough of Norristown v. Erdek, 1 Pa.Commonwealth Ct. 577, 275 A.2d 911 (1971), we considered the similar budgetary provisions of The Borough Code ⁸ and their relation to Section 5 of the Enabling Act. In Erdek we held that, although the budgetary provisions of The Borough Code were enacted subsequent to the Enabling Act, those budgetary provisions did not restrict the municipality's power, conferred by Section 5 of the Enabling Act, to pass a tax ordinance at any time, even after the adoption of a budget. In so...