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MURRAY ET UX. v. PHILADELPHIA ET AL. (02/14/50)

February 14, 1950

MURRAY ET UX.
v.
PHILADELPHIA ET AL.



Original jurisdiction, in Equity, Nos. 143 and 144, January T., 1950, in cases of Thomas J. Murray et ux. v. City of Philadelphia, Bernard Samuel, Mayor, and W. Frank Marshall, Receiver of Taxes and Sheridan Transportation Company v. Same. Decree entered sustaining contentions of plaintiffs and interveners.

COUNSEL

Albert Barnes Zink, with him George F. Shinehouse, Jr., for plaintiffs and interveners.

Abraham Wernick, Assistant City Solicitor, with him Frank F. Truscott, City Solicitor, for defendants.

J. Harry LaBrum, with him Lewis Weinstock and Conlen, LaBrum & Beechwood, for Chamber of Commerce of Philadelphia, amicus curiae.

Charles J. Biddle, with him Leslie M. Swope, David J. Smyth, Townsend, Elliott & Munson and Pepper, Bodine, Stokes & Hamilton, for Philadelphia Saving Fund Society et al., interveners.

Leslie M. Swope, Henry S. Drinker, Howard H. Yocum and Robert M. Blair-Smith, for Investment Bankers Association et al., interveners.

Robert Dechert, with him Francis L. Van Dusen, Carroll R. Wetzel and Barnes, Dechert, Price, Myers & Clark, for Corporate Fiduciaries Association of Philadelphia, amicus curiae.

Floyd W. Tompkins, with him James P. Schellenger, for Associated Hospital Service Employees Credit Union, intervenor.

Before Maxey, C.j., Linn, Stern, Stearne and Jones, JJ.

Author: Linn

[ 364 Pa. Page 160]

OPINION BY MR. JUSTICE LINN

We took original jurisdiction of two bills in equity filed against the City of Philadelphia and certain officers of the city praying for decrees restraining threatened enforcement of a revenue ordinance approved December 13, 1939, as amended by an ordinance approved December

[ 364 Pa. Page 1619]

, 1949, imposing income taxes and providing for their collection. The plaintiffs denied the power of the City to levy and collect taxes such as the plaintiffs averred the defendants were threatening to collect. The defendants filed answers admitting the averments of fact and pleading that the legislature had granted the asserted power. Whether the power asserted by the city was conferred by the legislature is the principal question now presented.

The ordinance, prior to the amendment of December 9, 1949, imposed a tax on earned income of individuals and of unincorporated businesses; corporations were excluded. That ordinance was considered in Breitinger v. Philadelphia, 363 Pa. 512, 70 A.2d 640, and in Murray v. Philadelphia, 363 Pa. 524, 70 A.2d 647 (1950). The present suits result from the amendment of December 9, 1949, which, for present purposes, may be said to have attempted to do two things: first, to increase the rate of taxation from 1% to 1 1/4%, and second, to include among the subjects of taxation many subjects that were not taxed by the ordinance before it was amended. The plaintiffs do not challenge the increase in the rate of 1 1/4% for taxes which the city has power to impose, but they deny the power of the city to impose the general income tax imposed by the amendment. The purpose of amending the ordinance was to tax many not taxed before.

Section 3 of the Ordinance provides for the imposition of a tax of 1 1/4% on: "(c)... the net profits earned after January 1, 1949, of businesses... conducted by such residents [of Philadelphia]; on (d) the... net profits earned after January 1, 1949, of businesses... conducted in Philadelphia by non-residents; and (e) at the rate of one and one-quarter per centum on all other net income derived after January 1, 1949, from any source whatsoever not provided for in (a), (b), (c) and (d) by persons who reside in Philadelphia,

[ 364 Pa. Page 162]

    and non-residents who derive such net income in Philadelphia.

"The tax levied under (a) and (b) herein shall relate to and be imposed upon salaries, wages, commissions and other compensation paid by an employer or on his behalf to any person who is employed by or renders services to him. The tax levied under (c) and (d) herein shall relate to and be imposed on the net profits of any business, profession or enterprise carried on by any person as owner or proprietor, either individually or in association with some other person or persons. The tax levied under (e) herein shall relate to and be imposed upon all other net income derived from any source whatsoever not provided for in (a), (b), (c) and (d) by any person."

Section 2 defines "person" as "every natural person, copartnership, fiduciary, association or corporation." It defines "resident" as "an individual, copartnership, association, corporation, or ...


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