Commonwealth v. Bailey, Banks & Biddle Co.

Opinion by

Rice, P. J.,

The defendant’s first proposition is, that the Act of May 2, 1899, P. L. 184, was not intended to apply to corporations. It is true that nowhere in the act do the words corporation, company, president, secretary or treasurer appear, but the phrases, “each retail vendor of, or retail dealer in goods,” “ each wholesale vendor of, or wholesale dealer in goods,” and other phrases of similar import are of frequent occurrence, and in the 5th section it is provided, that, “if any vendor of, or dealer in goods ” refuses to make return, the county treasurer may compel the attendance, amongst others, of any “ officer ’ connected with the business — a term which- probably would not have been used if the legislature had had in mind natural persons only. It cannot be said of the words “ vendor ” and “ dealer ” that they have a popular meaning, as distinguished from their technical meaning, which would exclude a corporation. Hence the principle of construction which was applied in School Directors v. Carlisle Bank, 8 Watts, 289, and Fox’s Appeal, 112 Pa. 337, does not apply here. In this act the context tends to show that the Avord person was used in its legal sense. Further, the phraseology of the mercantile license acts which preceded the act of 1899, did not more clearly evince an intent to include corporations than does that act. For example, the act of-1841 extended the provisions of earlier acts to “ all persons engaged in the selling or vending of goods,” etc., and provided that “ all such sellers or vendors shall be classEd,” etc.; the act of 1866, speaks of “ the present classification of licenses of vendors of merchandise; ” and the act of 1846 designated the persons to whom its provisions applied as “ all dealers in goods, wares and merchandise .... and every person -who shall keep a store or warehouse for the purpose of vending, etc. This language was construed to include a manufacturing corporation which kept a store or warehouse, where it sold goods-manufactured by others as well as those made by itself. “ As it is the object of the law to levy the tax on the business of the merchant or dealer, it is unimportant who the dealer may be, or whether the dealing is done in the name of a natural or an artifical person.” This was declared in a case where the question was distinctly raised, whether the act of 1830 and its supplements applied to corporations dealing in merchandise, and where the same authorities were cited, as are cited by this appellant, in support of the contention that those acts applied to natural persons only: Commonwealth v. Thomas Potter Sons & Co., 159 Pa. 583 (1894). Where terms and modes of expression are employed in a new statute, which, at the time of its enactment, had acquired, by judicial construction, a definite meaning and application in a previous statute on the same subject, they are generally supposed to be used in the same sense, and in the construction of the later act, regard should be had to the known and established interpretation of such terms and modes of expression in the former: Endlich on Interpretation of Statutes, sec. 369. A plainer case than the present for the application of this principle can hardly be imagined.

But it is argued that the case at bar is distinguishable from the case cited, in that the defendant in that case was chartered as a manufacturing corporation, and the mercantile tax was imposed upon it because it went outside of its ordinary channels of business and opened a store for the conduct of retail business, whereas, the defendant in this case received its charter since the passage of the Act of June 3, 1893, P. L. 288, and was authorized, thereby, to engage in the business of “the manufacture and production of silverware, plated'ware, jewelry, works of. ornament and art and pictures, and, the.buying and selling of such articles.” In answer to. this suggestion, we remark, that we find nothing in the opinion of Mr. Justice Williams to indicate that the decision was based on the fact that under its charter and the corporation laws then in force, the defendant was not specifically authorized to engage in the business of buying and selling at a place apart from its manufactory. The question whether this was ultra vires was not discussed. The points decided were, first, that the acts under consideration were broad enough to include corporations although that word was not used, and, second,- that the exemption granted by law to manufacturing- companies “ is confined to the plant used for the manufacture of its goods, and the business of making and selling done there; ” therefore, the conclusion followed which was thus stated: “ When such a corporation goes beyond the line thus indicated, it subjects so much of its capital used, and its business done, outside of the legitimate business of a manufacturing corporation, to the same taxation that other persons or corporations engaged in the business thus entered upon are required by law to pay.” This was in harmony with earlier decisions cited in the opinion, where the corporations possessed and exercised other powers than those of a manufacturing corporation. See also, 1 Weimer on Corporations, sec. 618. Having regard to the usual and ordinary signification of the words “ vendor ” and “ dealer,” to the definite meaning and application they had acquired by judicial construction of earlier statutes on the same subject, and -to the context, we conclude, that the defense cannot be sustained upon the ground that the defendant is a corporation authorized by its charter to engage in the business of buying and selling.

It is further contended, that the defendant having paid, thp bonus required at the time of its incorporation, and having since annually paid the whole amount of the corporation tax assessed upon the whole value of its capital stock and assets, is entitled to carry on business without being subjected to the additional tax or license for the privilege of. selling its goods.

There is no such inconsistency involved in subjecting a brading corporation, that has been required to pay a bonus of one .-quarter of one per cent upon the amount of its capital stock before receiving its letters patent, to a mercantile license tax, as would warrant us in supposing that the legislature intended to exempt such a vendor or dealer from the operation of the act of 1899. A bonus, as the term is used in this connection, is “ a sum exacted by the state from a corporation for granting a charter; in such case it is clearly distinguished from a tax: ” 1 Bouv. Law Dict. Rawle’s ed. p. 254; Baltimore & Ohio R. R. Co. v. Maryland, 21 Wall. (U. S.) 456; Commonwealth v. Erie & Western Transportation Co., 107 Pa. 112. The payment of such bonus as a consideration for the grant of the franchise to be a trading corporation does not create a contract which implies a surrender by the state of any part of its taxing power. Nor does the fact add strength to the argument, that, if the act of 1899 be construed as applying to such corporations, they will be subjected to double taxation.

Whether or not the defendant, being both a manufacturer and a dealer, was liable to a tax upon the actual value of its “ whole ” capital stock seems to us immaterial in this case. Therefore we shall not discuss that question further than to say that if it was not liable to a tax upon that part of its capital invested in its business as a manufacturer, the fact that such tax was assessed and paid cannot be urged in support of its claim to immunity from the mercantile license tax. The only fact important to be noticed in considering this claim to immunity is, that it was liable to pay, and has paid, the capital stock tax upon such proportion of its capital stock, “ as ” (quoting from the Act of June 8, 1893, P. L. 353) “ may be invested in. any property or business not strictly incident or appurtenant to its manufacturing business.” In view of this fact does the exaction of a mercantile license tax subject the defendant to double taxation ? “ It has been repeatedly decided, and it is settled law, that a tax upon the capital stock of a company is a tax upon its property and assets: ” Commonwealth v. Standard Oil Co., 101 Pa. 119; Fox’s Appeal, 112 Pa. 337. In no sense is it a consideration for the privilege of carrying on the business for which the company was chartered. The nature and subject of the tax imposed by the act of 1899, have been authoritatively determined in the case of Knisely v. v. Cotterel, 196 Pa. 614. Judge Simonton, who delivered the opinion of the common pleas, said, after citing and discussing several oases: “ On the analogy of these and many like cases that might be cited, we are of opinion that the tax in question here is a tax, not on the property of the dealers or vendors, but on their business transacted during the preceding year measured by its volume in dollars.” And after discussing the question whether the law could be sustained as a tax upon property, Mr. Justice Mitchell, who delivered the opinion of the Supreme Court, said: “ As already said, it could be sustained as a classification according to the uses and purposes for which the property is held. But an examination of the details of the present act makes it clear that the tax, as held by the learned judge below, is upon the business of vending merchandise, and that the classification is based on the manner of sale, and within each class the tax is graduated according to the gross annual volume of business transacted. This is apparent from the fact that the amount of the tax-over the small fixed license fee is determined in every case by the volume of business, measured in dollars, and the rate at which it is to be levied is according to the manner of sale.” It is thus seen, that whilst the declared purpose of the tax is to provide revenue, in which respect it does not differ from the capital stock tax, the subject of taxation is not the same. In one case it is the property and assets invested in the business, and is measured by the value, in the other case it is the business itself, and is not measured by the value of the property invested or the profits, but the volume of the sales. We are not clear that this results in that kind of double taxation which is condemned by the courts. But double taxation, while not to be presumed in the absence of a clear intent to impose it, is not forbidden by the constitution and is sometimes unavoidable. See Cooley on Const. Lim. 231, also Commonwealth v. N. Y., Lake Erie & W. R. R. Co., 150 Pa. 234. It is to be borne in mind, also, that at the time of the passage of the amendatory act of 1893, relative to the taxation of capital stock, mercantile license laws were in force, which, as we' have seen, were broad enough to include manufacturing corporations engaged in the business of dealers apart from their manufactories. The concluding paragraph of the fourth proviso of the section would seem to indicate an intention to relieve only so much of the capital stock as is invested in the manufacturing plant and business from any form of state taxation. We are unable to distinguish the case in principle from Commonwealth v. Thomas Potter Sons & Co.; we therefore conclude that the commonwealth was entitled to judgment.

Judgment affirmed.