Kiker v. Philadelphia

• Citation: 346 Pa. 624,31 A.2d 289
• Decision Date: 29 March 1943
• Docket Number: 107
• Parties: Kiker, Appellant, v. Philadelphia et al
• Court: Pennsylvania Supreme Court

31 A.2d 289

346 Pa. 624

Kiker, Appellant, v. Philadelphia et al

No. 107

Supreme Court of Pennsylvania

March 29, 1943

January 28, 1943, Argued

Appeal, No. 107, Jan. T., 1943, from decree of C.P. No. 4 Phila. Co., Dec. T., 1942, No. 950, in case of Howard Kiker v. The City of Philadelphia et al. Decree affirmed.

Bill in equity.

Preliminary objections sustained and decree entered dismissing bill opinion by BLUETT, J. Plaintiff appealed.

Decree affirmed; costs to be paid by appellant.

George P. Williams, Jr., and Louis B. LeDuc, with them Orr, Hall &amp Williams and Ralph W. Wescott, for appellant.

Abraham Wernick and Abraham L. Shapiro, Assistant City Solicitors, with them Ernest Lowengrund, Acting City Solicitor, for appellees.

Before MAXEY, C.J.; DREW, LINN, PATTERSON, PARKER and STEARNE, JJ. (STERN, J., absent.)

OPINION

MR. JUSTICE DREW:

This suit in equity was instituted by Howard Kiker, a resident of the State of New Jersey, to restrain the enforcement of the provisions of an ordinance of the City of Philadelphia, approved December 13, 1939, which imposes a tax of one and one-half per centum annually on, inter alia, salaries, wages, commissions and other compensation for work done or services performed in that City, as against any such income received by him after December 31, 1940, from employment by the United States government at the Philadelphia Navy Yard, a Federal area on League Island. Defendants, the City of Philadelphia and its officials, filed preliminary objections to the bill, assigning as one of the reasons therefor that no cause of action was stated, and, after argument and stipulation of counsel that the case be disposed of finally on the undisputed facts and upon questions of law, the learned court below entered a final decree sustaining the objections raised and dismissing the bill. The plaintiff then appealed to this Court. ^[1]

In his bill, plaintiff alleged that he is a resident of Mt. Ephraim of the State of New Jersey and that he has been employed for the past sixteen years at the League Island Navy Yard as a supervisor, planner and estimater in its industrial department. The bill prays that the City and its officials be prevented from enforcing the ordinance for the following reasons; that it is an attempt to impose a tax upon compensation for services of nonresidents rendered outside of the City, that it is an attempt to impose a tax on persons who receive no protection or benefit from the City, and that it is an attempt to impose a tax on plaintiff's employment by the Federal government.

League Island lies on the westerly bank of the Delaware River, just above the mouth of the Schuylkill, and originally was a part of the City of Philadelphia. The Commonwealth of Pennsylvania, by the Acts of March 29, 1827, P.L. 153; February 10, 1863, P.L. 24; and April 4, 1866, P.L. 96, granted consent to the United States government, inter alia, to purchase and acquire, for naval and other purposes, a tract of land in the City and County of Philadelphia, known as League Island; and also ceded to the Federal government the right to exclusive jurisdiction thereover, providing, however, "That the cession . . . made shall continue in force so long as the . . . territory shall be used by the government of the United States for the purposes of a navy yard, and no longer: And provided, also, That all process, civil and criminal, of the commonwealth of Pennsylvania, shall extend into, and be effectual, within the territory hereby ceded, as if this law had not passed." Pursuant to appropriate federal legislation, approved February 18, 1867, 14 U.S. St. at L., c. 46, p. 396, a Certificate of Acceptance of this tract in the City and County of Philadelphia, dated December 23, 1868, was recorded in the office of the Recorder of Deeds in Philadelphia County in Volume 19 (J.T.O. 2) Miscellaneous Land Records p. 208. See Manlove v. McDermott, 104 Pa.Super. 560. On October 9, 1940, Congress passed Public Act No. 819 (54 Stat. 1059, 4 U.S.C.A. Section 14), providing by section 2, ^[2] that persons living or receiving income in a Federal area should not be relieved from liability to pay any income tax levied by any State or any duly constituted State taxing authority having jurisdiction to levy such a tax by reason of residence or employment in the Federal area.

Three questions are presented for our determination: first, whether Congress was acting within its constitutional limits in attempting by Public Act No. 819 to confer upon the Commonwealth of Pennsylvania and its political subdivisions the power to tax incomes earned within a Federal area; second, whether by the terms of that statute Congress did permit the City of Philadelphia to levy the tax in question; and, third, whether the Philadelphia ordinance imposing the tax may be so construed as to embrace the Federal area of League Island. These questions have never been passed upon by us, nor, so far as our research reveals, by any other appellate court. We shall consider them in the order stated.

It is clear that since this Commonwealth granted to the United States government exclusive jurisdiction, without qualification or restriction, save as to the service of criminal and civil process and as to limitation upon the duration of the cession, the City of Philadelphia could not lawfully impose a tax upon income received by a nonresident from transactions occurring or services performed in the Federal area of League Island (Standard Oil Co. v. California, 291 U.S. 242), unless, of course, Congress can grant such consent. See United States v. City of Buffalo, 54 F. (2d) 471. It was originally supposed that a State, in granting consent to the Federal government to purchase territory upon which to erect forts, magazines, arsenals, dock-yards and other needful buildings, could not constitutionally qualify its consent, and that jurisdiction, under such circumstances, had to be exclusively in the United States government, on account of the provisions of Article I, Section 8, Clause 17 of the Constitution of the United States: ^[3] United States v. Cornell, 2 Mason's Reports (U.S.C.C.) 60; Fort Leavenworth R.R. Co. v. Lowe, 114 U.S. 525. However, it is now well settled that in granting consent to the Federal government a State can reserve to itself such jurisdiction (e.g. the right to impose taxes in the area in question) as will not interfere with the enjoyment by the government of the United States of the property for the uses and purposes for which it was obtained: James v. Dravo Contracting Co., 302 U.S. 134. In the latter case, a suit was brought by a contracting company to restrain the collection of a tax imposed by the State of West Virginia on gross receipts obtained by it under contracts with the National government. It was held that the tax was applicable to receipts obtained under contracts performed by a Pennsylvania corporation upon lands purchased by the government of the United States for use in connection with the erection of needful buildings (dams), for the reason that the consent of the State to purchase contained a reservation of its right to tax in such areas. There, the Supreme Court of the United States, speaking through its then Chief Justice, said (p. 146): ". . . it is urged that if the paragraph be construed as seeking to qualify the consent of the State, it must be treated as inoperative. That is, that the State cannot qualify its consent, which must be taken as carrying with it exclusive jurisdiction by virtue of Clause 17 [of Article I, Section 8 of the Federal Constitution] . . . [p. 148]. Normally, where governmental consent is essential, the consent may be granted upon terms appropriate to the subject and transgressing no constitutional limitation . . . Clause 17 contains no express stipulation that the consent of the State must be without reservations. We think that such a stipulation should not be implied. We are unable to reconcile such an implication with the freedom of the State and its admitted authority to refuse or qualify cessions of jurisdiction when purchases have been made without consent or property has been acquired by condemnation. In the present case the reservation by West Virginia of concurrent jurisdiction did not operate to deprive the United States of the enjoyment of the property for the purposes for which it was acquired, and we are of the opinion that the reservation was applicable and effective." On the same day it was also said by that tribunal, in this connection, in Mason Co. v. Tax Comm'n, 302 U.S. 186, 207-8: "The mere fact that the Government needs title to property within the boundaries of a State, which may be acquired irrespective of the consent of the State (Kohl v. United States, 91 U.S. 367, 371, 372), does not necessitate the assumption by the Government of the burdens incident to an exclusive jurisidiction. We have frequently said that our system of government is a practical adjustment by which the national authority may be maintained in its full scope without unnecessary loss of local efficiency. In acquiring property, the federal function in view may be performed without disturbing the local administration in matters which may still appropriately pertain to state authority."

It follows, therefore, that the Commonwealth of Pennsylvania when it consented to the purchase of League Island by the National government and ceded jurisdiction over it, could have reserved to itself the right to tax in such area, even though the territory was acquired for use as a dock-yard, just as a number of States have done under similar circumstances with respect to land within their respective geographical limits. ^[4] There can be no logical objection on constitutional grounds if the same result is...