Philadelphia, Germantown & Norristown Railroad Co. v. Philadelphia & Reading Railway Co.

• Decision Date: 21 June 1919
• Docket Number: 13
• Citation: 108 A. 528,265 Pa. 325
• Parties: Philadelphia, Germantown & Norristown Railroad Company v. Philadelphia & Reading Railway Company, Appellant
• Court: Pennsylvania Supreme Court

108 A. 528

265 Pa. 325

Philadelphia, Germantown & Norristown Railroad Company v. Philadelphia & Reading Railway Company, Appellant

No. 13

Supreme Court of Pennsylvania

June 21, 1919

Argued May 14, 1919

Appeal, No. 13, Jan. T., 1920, by defendant, from order of C.P. No. 4, Phila. Co., June T., 1918, No. 3420, making absolute rule for judgment for want of a sufficient affidavit of defense in the case of Philadelphia, Germantown and Norristown Railroad Company v. Philadelphia & Reading Railway Company. Affirmed.

Assumpsit to recover $11,976.75 for reimbursement on account of corporation excess profits tax assessed plaintiff by United States government.

Defendant by its affidavit of defense, claimed that plaintiff should not have paid any excess profits tax because it was not engaged in business, its road being operated by defendant under lease, and denied that under the terms of the lease defendant was liable for the amount of the excess profits tax.

The court entered judgment for want of a sufficient affidavit of defense for the reasons stated in the opinion by AUDENRIED P.J., filed September 26, 1919, as follows:

There can be no doubt that the plaintiff was bound to pay the income tax and the war excess profits taxes assessed against it for the year 1917 by the federal government. By clause third of the lease under which defendant occupies and operates the plaintiff's property, the former agreed to pay all taxes and assessments upon the rent reserved by the latter in that instrument, for the payment of which taxes the plaintiff would otherwise be liable. The defendant failed to pay the war excess profits tax assessed against the plaintiff for the year 1917 and it has been paid by the plaintiff, which brings this action to secure reimbursement for that which it has thus expended. It was held by our Supreme Court in North Pennsylvania R.R. Co. v. Phila. & Reading Ry. Co., 249 Pa. 326, that a covenant by the lessee to pay all taxes imposed upon the rent payable under such a lease as that with which we are here concerned, obligated it to pay the United States income tax assessed against the lessors whose annual income consisted of the rental payable by the lessee. In Philadelphia City Passenger Ry. Co. v. Phila. Rapid Transit Co., 263 Pa. 561, it was decided that in this respect the war excess profits tax stood upon the same footing with the income tax on net profits. This case is ruled by this precedent. Further discussion of the subject is not necessary. Rule for judgment is affirmed.

Defendant ...