Opinion
May 26, 1949.
June 24, 1949.
Taxation — Corporations — Domestic — Capital stock tax — Value of capital stock — Inclusion of shares of foreign corporation — Double taxation — Act of May 16, 1935, P. L. 184.
1. Shares of stock of a foreign corporation subject to the Pennsylvania corporate franchise tax, which are owned by a domestic corporation, are properly included in the value of its capital stock in settling its capital stock tax under the Act of May 16, 1935, P. L. 184. [493-4]
2. Commonwealth v. Monessen Amusement Company, Inc., 352 Pa. 120, followed. [493-4]
3. Arrott's Estate, 322 Pa. 367, distinguished. [493-4]
Before MAXEY, C. J., LINN, STERN, PATTERSON, STEARNE and JONES, JJ.
Appeal, No. 20, May T., 1949, from judgment of Court of Common Pleas of Dauphin County, Commonwealth Docket, 1940, No. 610, in case of Commonwealth v. The Shenango Furnace Company. Judgment affirmed.
Appeal by taxpayer from decision of Board of Finance and Revenue upon petition for resettlement of capital stock tax.
Judgment entered for Commonwealth, opinion by WOODSIDE, J. Taxpayer appealed.
John Y. Scott, for appellant.
David Fuss, Deputy Attorney General, with him T. McKeen Chidsey, Attorney General and Carl F. Chronister, for appellee.
The question raised on this appeal is the converse of the question decided in Commonwealth v. Monessen Amusement Company, Inc., 352 Pa. 120, 42 A.2d 158. There, a foreign corporation, subject to the Pennsylvania corporate franchise tax, contended that to include in the value of its capital stock, for the purpose of settling the franchise tax, its investment in shares of stock of a domestic corporation, liable for the Pennsylvania capital stock tax, constituted double taxation contrary to the legislative intent as well as the legal presumption in the circumstances. In speaking for this Court in that case, Mr. Justice STEARNE, after pointing out the plain distinction between Pennsylvania's capital stock tax and its corporate franchise tax, held that double taxation did not result in the Monnessen case, observing in relevant connection (p. 123) that "Double taxation cannot exist where the subject matter of taxation in two acts is not the same [citing cases]."
In the instant case, the defendant, a domestic corporation, owned in the tax year involved shares of stock (less than a majority) of a foreign corporation which, doing business in Pennsylvania and employing property there, was subject to the Pennsylvania corporate franchise tax. The present defendant similarly contends that, to include in the value of its capital stock, in settling the capital stock tax, its investment in the shares of the taxable foreign corporation works double taxation contrary to the intent of the legislature. The learned court below, in expressed reliance upon the decision by the same court in Commonwealth of Pennsylvania v. Elk Refining Company, 57 Dauphin Co. Rpts. 278 (1945) — a case on all fours with the present — rejected the defendant's contention and entered judgment for the Commonwealth. This appeal by the defendant followed.
The judgment entered for the Commonwealth was for the amount of the Attorney General's commission on the basis of the tax actually in controversy, the action below having arisen on an appeal by the defendant company from the refusal by the Board of Finance and Revenue of the defendant's cognate claim for refund.
As in the Monessen case, supra, the appellant bottoms its argument on the decision in Arrott's Estate, 322 Pa. 367, 185 A. 697, where a certain equivalence between the capital stock tax on domestic corporations and the franchise tax on foreign corporations was recognized. What the appellant overlooks, however, is that the equivalence, so noted, was of importance in Arrott's Estate to the construction of the express exemption provisions of the four mill county tax Act of June 17, 1913, P. L. 507, and the State Personal Property Tax Act of June 22, 1935, P. L. 414, there involved. No such question arises here under either of the statutes with which this case is concerned, viz., the capital stock tax Act of June 1, 1889, P. L. 420, and the franchise tax Act of May 16, 1935, P. L. 184. The questions of express exemption and of alleged double taxation are without presently material bearing upon one another, as the Monessen case distinguishment of Arrott's Estate clearly reveals.
The facts of the instant case are materially identical with the facts in Commonwealth v. Elk Refining Company, supra, where the late President Judge HARGEST of the Court of Common Pleas of Dauphin County said that the question involved (which was the same as the present) was "settled by the case of Commonwealth v. Monessen Amusement Co., 352 Pa. 120, . . ." and "is no longer an open question." The learned judge was right in both particulars. The principles pertinent to the decision in the Monessen case logically apply with equal force to the facts of this case just as they did in the Elk Refining Company case; and the question is, therefore, no longer an open one.
Judgment affirmed.