Edward B. Hodge, Norris, Lex, Hart & Eldredge, Philadelphia, for appellant.
Sidney L. Wickenhaver, C. Brewster Rhoads, Montgomery, McCracken, Walter & Rhoads, Edward B. Soken, Philadelphia, for appellees.
Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross, Arnold and Gunther, JJ.
[ 171 Pa. Super. Page 613]
Appellant, Board of Christian Education of The Presbyterian Church In The United States of America, a New York nonprofit corporation organized for religious purposes, duly registered in Pennsylvania, sought an injunction against the School District of the City of Philadelphia and its Receiver of Taxes to restrain the collection of taxes imposed by the Act of May 23, 1949, P.L. 1669, 24 P.S. § 584.1 et seq.*fn1 The School District's preliminary objections were dismissed and the bill dismissed. This appeal followed.
The Act, § 3, provides: ' Every person engaging in any business in any school district of the first class shall pay an annual tax at the rate of one (1) mill on each dollar of the annual receipts thereof. ' 'Business' is defined by § 1(2) as 'Carrying on or exercising for gain or profit within a school district of the first class, any trade, business, including financial business as hereinafter defined, profession, vocation, or commercial activity, or making sales to persons within such school district of the first class.' The same section, so far as pertinent here, excludes from the operation
[ 171 Pa. Super. Page 614]
of the Act: 'Any business conducted by a non-profit corporation or association organized for religious, charitable, or educational purposes, * * * .'*fn2 (Emphasis added.)
The facts are not disputed and are stated in the bill and a stipulation. The Board owns and operates an office building, consisting of a basement and eleven floors, at Walnut and Juniper Streets, in the business center of Philadelphia. It contains approximately 127,315 square feet of floor space, of which 16,660 square feet are occupied as an auditorium; 88,600 square feet by the Board and other Church agencies; and 38,700 square feet by commercial tenants. During the year ended December 31, 1950, the Board collected $100,106.03 from 44 commercial tenants and from nonchurch users of the auditorium. The School District claims $100.11 tax upon the receipts from the commercial tenants.
[ 171 Pa. Super. Page 615]
The Board contends that the provision excluding 'Any business conducted by non-profit corporation * * * organized for religious, charitable, or educational purposes' is a permissible and constitutional classification of the subjects of taxation, and is thereby relieved from payment of the tax. On the other hand, the School District, denying that the provision is a proper classification, contends that it is an abortive attempt to exempt the Board from taxation in violation of the Constitution, Art. IX, §§ 1, 2, P.S.
I. The courts have recognized a distinction between a tax immunity produced by a classification and one created by an exemption. Com. v. Germania Brewing Co., 145 Pa. 83, 22 A. 240. '[C]lassification does not always lead to an exemption'. Turco Paint & Varnish Co. v. Kalodner, 320 Pa. 421, 432, 184 A. 37, 43. But where the immunity, granted either by an exemption or a classification, depends upon the construction of the terms of a statute the claimant must bring himself clearly and squarely within the exclusionary provision. 'Language which relieves from taxation is to be strictly construed'. Com. v. Lackawanna Iron & Coal Co., 129 Pa. 346, 356, 18 A. 133, 134, 1120. McGuire v. Pittsburgh School Dist., 359 Pa. 602, 60 A.2d 44, and the cases therein cited. Statutory Construction Act of May 28, 1937, P.L. 1019, § 58(5), 46 P.S. § 558.
II. The Constitution, Art. IX, § 1, authorizes the General Assembly to 'exempt from taxation * * * actual places of religious worship, * * * [and] institutions of purely public charity'. Section 2 provides: 'All laws exempting property from taxation, ...