Opinion
April 15, 1946.
May 27, 1946.
Taxation — Personal property — Corporate loans — Consolidated corporation — Liability for tax — Tax-free covenant — Bonds held by savings institutions — Acts of June 22, 1935, P. L. 414, and May 18, 1937, P. L. 633.
1. A corporation organized by consolidation of corporations incorporated under the laws of several States, including Pennsylvania, is to be regarded as a domestic corporation, and, as such, is liable for the corporate loans tax under section 17 of the Act of June 22, 1935, P. L. 414, as re-enacted and amended by the Act of May 18, 1937, P. L. 633, even though it does not have a treasurer resident within the Commonwealth. [389-90]
2. Fidelity-Phila. Trust Co. Tax Case, 354 Pa. 355, followed. [390]
Constitutional law — Corporations — Taxation — Discrimination — Classes of bonds — Act of May 18, 1937, P. L. 633.
3. The provision in the Act of May 18, 1937, P. L. 633, § 3, that a corporation which has agreed to issue its bonds free from the personal property tax is not relieved from paying the tax on bonds held by a savings institution having no capital stock (which is itself exempt from the tax) is not an unconstitutional discrimination between bonds containing and those not containing a tax-free covenant. [390]
Before MAXEY, C. J., DREW, LINN, STERN, PATTERSON and JONES, JJ.
Appeals, Nos. 13 and 14, May T., 1946, from judgment of C. P., Dauphin Co., Commonwealth Docket, 1941, No. 200, and Commonwealth Docket, 1944, No. 92, in case of Commonwealth v. The New York, Chicago and St. Louis Railroad Company. Judgment affirmed; reargument refused June 25, 1946.
Appeal by Railroad Company from settlement of corporate loans tax. Before HARGEST, P. J., without a jury.
Judgment entered in favor of Commonwealth. Defendant appealed.
John Y. Scott, with him Robert M. Fisher, for appellant.
George W. Keitel, Deputy Attorney General, with him B. B. Bastian, Deputy Attorney General and James H. Duff, Attorney General, for Commonwealth, appellee.
Thomas B. K. Ringe, with him J. Wesley Oler, Raymond E. Doyle, William H. Neely, Frederick H. Spotts, Pepper, Bodine Stokes and Morgan, Lewis Bockius, for Fidelity-Philadelphia Trust Co., Trustee for Sundry Trusts, amicus curiæ.
Owen Biddle and Townsend, Elliott Munson, for Provident Trust Company of Phila., Trustee for Sundry Trusts, amicus curiæ.
H. Ober Hess and Ballard, Spahr, Andrews Ingersoll, for Girard Trust Company, Trustee for Sundry Trusts, amicus curiæ.
Francis H. Bohlen, Jr., Joseph A. Lamorelle and Saul, Ewing, Remick Harrison, for The Pennsylvania Company for Insurances on Lives and Granting Annuities, Trustee for Sundry Trusts, amicus curiæ.
Argued April 15, 1946.
The questions involved in these cases have been considered at length in Fidelity-Philadelphia Trust Company Tax Case, 354 Pa. 355, 42 A.2d 267. The New York, Chicago St. Louis Railroad Company appeals from assessments of the corporate loans tax imposed upon it for the years 1937 and 1941. This company is the offspring of three successive consolidations: — the first between the New York, Chicago and St. Louis Railroad Company (a New York corporation) and a Pennsylvania corporation, the second between the consolidated New York, Chicago St. Louis Railroad Company, an Ohio corporation and an Indiana corporation; the third between the twice previously consolidated New York, Chicago St. Louis Railroad Company, two Illinois and two Indiana corporations. Some of the bonds here in question were issued by the present corporation, others by either the first or the second consolidated company. The corporation does not have any fiscal officer resident within this Commonwealth and the interest on the bonds is paid from an office outside the State.
For the reasons stated in the Fidelity-Philadelphia Trust Company case we are of opinion that appellant is to be regarded as a domestic corporation and that therefore its liability for the corporate loans tax is not affected by the fact that it does not have a treasurer resident within the Commonwealth.
Some of appellant's bonds are held by Pennsylvania savings institutions having no capital stock, but they contain covenants that the interest will be paid without any deduction for taxes. The Act of May 18, 1937, P. L. 633, section 3, while providing that the personal property tax is not applicable to such savings institutions, further provides that if a corporation has agreed to issue its bonds free from the tax it is not relieved from paying the tax on its bonds held or owned by such an institution, — a provision which harks back to the Act of May 1, 1909, P. L. 298. Appellant contends that this constitutes an unconstitutional discrimination between bonds containing and those not containing a tax-free covenant, but provisions of this type were considered and upheld in Commonwealth v. Lehigh Valley R. R. Co., 244 Pa. 241, 90 A. 564, and Commonwealth v. Pittsburgh School District, 343 Pa. 394, 23 A.2d 496.
Judgment affirmed.