Opinion
September 9, 1940.
September 10, 1940.
Constitutional law — Taxation — Uniformity — Exemption — Act of June 26, 1939, P. L. 1100 — Article IX, sections 1 and 2.
1. The Act of June 26, 1939, P. L. 1100, which relates to the collection by municipalities of the market value of tax liens, is not unconstitutional, in violation of Article IX, section 1, of the Constitution, on the ground that it results in lack of uniformity of taxation on the same class of subjects. [428-9]
2. The Act of 1939 is not unconstitutional, in violation of Article IX, section 2, of the Constitution, in that it results in the exemption from taxation or partial exemption of land sold under the act. [429-30]
Constitutional law — Local or special laws — Taxation — Act of June 26, 1939, P. L. 1100 — Article III, section 7.
3. The Act of June 26, 1939, P. L. 1100, is not a local or special law exempting property from taxation in violation of Article III, section 7, of the Constitution, forbidding the passing of any local or special law. [430]
Constitutional law — Legislative power — Delegation — Act of June 26, 1939, P. L. 1100.
4. The Act of June 26, 1939, P. L. 1100, is not unconstitutional on the ground that it delegates unlawful authority to the Board of Revision of Taxes. [430-31]
Argued September 9, 1940.
Before SCHAFFER, C. J., DREW, LINN, STERN, BARNES and PATTERSON, JJ.
Appeal, No. 295, Jan. T., 1940, from decree of C. P. No. 3, Phila. Co., June T., 1940, No. 5144, in case of Charles E. Burkley v. City of Philadelphia et al. Decree affirmed.
Bill in equity. Before MacNEILLE and MILNER, JJ.
The facts are stated in the opinion, per curiam, of the court below, as follows:
By this bill a taxpayer seeks to test the constitutionality of the Act of Assembly of June 26, 1939, P. L. 1100. There is no contention that what the city proposes to do in accordance with the provisions of this act is in any way improvident or prejudicial to the best interests of the city. The question before us relates to the constitutionality of the proposed procedure in this case.
The plaintiff contends that the Act of 1939 is unconstitutional because:
1. It results in lack of uniformity of taxation on the same class of subjects;
2. It results in the exemption from taxation or partial exemption of land sold under the act;
3. It is a local or special law for exempting or partially exempting property from taxation;
4. It delegates unlawful authority to the Board of Revision of Taxes.
The situation arises because the sum of approximately $1,300,000 in unpaid real estate taxes is a lien upon real estate known locally in Philadelphia as Cramp's Shipyard. The defendants, believing it is impossible to sell the property at sheriff sale for a sum that will satisfy the tax claim, are attempting in their present effort to recover on account of their claims what they consider to be the fair market value of the property. Accordingly the defendants have fixed an upset price in accordance with the Act of 1939. The defendants feel justified in doing this because there has been no demand for the industrial use of this property for many years, during which time no taxes have been paid, and they have become delinquent, but due to an unusual situation with respect to the demand for facilities for building ships by the United States government and others, there is a strong demand that this property be put to industrial use and thereafter respond to the demands of taxation and at the same time be a means of affording employment to thousands of citizens.
In accordance with the Act of 1939 the city has procured the certificate of the Board of Revision of Taxes setting forth its valuation of the fair market value of the Cramp Shipyard real state at $100,000, and the defendants here, as plaintiff in the proceedings on the execution of the tax claim, have placed on the said real estate an upset price of $100,000 in contemplation of its sale by the sheriff in accordance with the terms of said Act.
We have been informed that the defendants are acting in this matter largely at the suggestion of the federal government, which is anxious to have the property placed in active use for ship building, and the federal government in order to facilitate the opening of the shipyard has agreed to discharge its lien against the said real estate, in the amount of $923,320, in consideration of the payment to it of the sum of $100,000 and the delivery to it of certain releases of claims of the Cramp Ship and Engine Building Company, which the Cramp Ship and Engine Building Company, titleholder of the said property, has against the federal government.
Plaintiff's first contention is that the procedure under the Act of 1939 violates the constitutional provision requiring uniformity of taxation upon the same class of subjects. This objection is based upon Article IX, Section 1, of the Constitution:
"All taxes shall be uniform upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws; but the General Assembly may, by general laws exempt from taxation public property used for public purposes, actual places of religious worship, places of burial not used or held for private or corporate profit, and institutions of purely public charity, . . ."
It will be noticed that the requirement of uniformity set forth in the Constitution relates to taxes, whereas the Act of 1939 relates to the collection by municipalities of the market value of tax liens.
As a result of the procedure under the Act of 1939 taxes are not disturbed nor are the taxpayers relieved from their obligation to pay taxes in the full amount thereof. For instance, in the case at bar the Cramp Ship and Engine Building Company will still be liable for any unpaid balance of tax claims held by the defendants, which remain after credit is given for the amount received on the sheriff's sale on the tax lien property. The Act is designed to enable a municipality to obtain the fair market value of the property of taxpayers upon which they have filed liens and which the municipality holds as a sort of collateral for their tax claim. The uniformity and equality of rate of tax is not affected in the slightest degree by the Act of 1939, and we are, therefore, of opinion the statute does not offend the rule of uniformity set forth in Article IX, Section 1, of the Constitution.
The second contention of the plaintiff is that the Act of 1939 results in exemption from taxation or partial exemption from taxation on land sold under the Act. This contention is based on Article IX, Section 2, of the Constitution. The Act does not exempt any property from taxation, it deals merely with a lien which is a purely statutory creation. It permits the holder of a lien to realize the full value of the security itself; it in no manner gives any benefit to the tax debtor. We are, therefore, of opinion that this contention is untenable.
The third contention of the plaintiff is that the Act of 1939 is a local or special law exempting or partially exempting property from taxation in violation of Article III, Section 7, of the Constitution, forbidding the passing of any local or special law. The Act applies to all taxables within the state, its provisions apply in every county and municipal subdivision of the state, therefore we fail to see in it any limited local application or any special application to any class. The Act is not a method whereby some owners of real estate may be entirely relieved of their tax whilst others are not so relieved; it is not for the benefit of debtors generally or for specific debtors, nor is it for the benefit of any special class. The Act is for the benefit of creditors holding tax liens and can be invoked only by them. We are, therefore, of the opinion that this contention has no force.
The fourth and final contention of the plaintiff is that the Act of 1939 delegates unlawful authority to the Board of Revision of Taxes inasmuch as it authorizes it to place a valuation upon the property against which there exists a tax claim which is in excess of the market value of the property. In doing this the Legislature has merely designated a certain body for the purpose of making an appraisal. The only effect of this appraisal is that the municipality in fixing its upset prices may not do so at less than this valuation. We fail to see in this procedure how any citizen or taxpayer can suffer any injury or loss inasmuch as the tax lien property must be sold at a public, judicial sale, at which presumably there will be open bidding and its market value will be obtained, therefore the valuation can have no unfair or unjust effect. The Board of Revision of Taxes has been designated only as an appraising or fact-finding body, and is restricted in placing its value upon the property to doing so in accordance with the market value. The law is replete with clear definitions of what constitutes market value, and the Board is obliged to limit itself by those definitions; furthermore, the Board can only act under the conditions prescribed in the Act, which provides, inter alia, that it is to be invoked only when the market value of the property is not sufficient to meet the tax claim. We fail to see in this any delegation of legislative power.
There being no questions of fact in dispute, there is no necessity for us to make formal findings of fact.
We reach the following conclusions of law:
1. The Act of June 26, 1939, P. L. 1100, as it relates to the facts in this case before us, is valid and constitutional;
2. The actions of the defendants, as set forth in the Bill and admitted in the Answer, are legal and valid;
3. The action of the Board of Revision of Taxes in filing its certificate in the proceedings relating to the tax claim, to wit, "City of Philadelphia versus William Cramp and Sons' Ship and Engine Building Company, C. P. No. 4, June Term, 1936, No. 10467," which certificate fixed the fair market value of the William Cramp and Sons' Ship and Engine Building Company real estate at $100,000, is legal and valid;
4. That it is entirely lawful and legal for the plaintiff in the tax claim, "City of Philadelphia versus William Cramp and Sons' Ship and Engine Building Company, C. P. No. 4, June Term, 1936, No. 10467," to proceed with its execution and cause a sheriff sale thereon, with an upset price placed thereon as set forth in the Bill of Complaint;
5. The plaintiff has brought this suit in good faith and determination of the questions raised is material and important to the public welfare, therefore the Bill of Complaint in this case should be dismissed at the cost of the City of Philadelphia and the School District of Philadelphia, defendants herein.
Counsel have stipulated that this hearing be final, and any judgment rendered, or decree made by the Court, shall be considered a final judgment, from which an appeal may be taken.
We therefore enter the following
FINAL DECREEAND NOW, August 16th, 1940, upon consideration of the foregoing cause, it is ordered, adjudged and decreed as follows:
1. The Bill of Complaint in this case is dismissed.
2. The costs in this case shall be paid by the City of Philadelphia and the School District of Philadelphia, defendants herein. Plaintiff appealed.
Errors assigned were various conclusions of law of the court below and the entry of the final decree.
Frederic L. Clark, of Shields, Clark, Brown McCown, for appellant.
Michael D. Hayes, Assistant City Solicitor, with him Francis F. Burch, City Solicitor, and Edward B. Soken, for appellee.
Thomas Reath, of Drinker, Biddle Reath, for Cramp Shipbuilding Co., under Rule 61.
Joseph W. Henderson, of Rawle Henderson, for Citzens Committee, under Rule 61.
The decree is affirmed on the opinion of the court below. Costs to be paid by the City of Philadelphia.