Appeal, No. 6, May T., 1954, from judgment of Court of Common Pleas of Dauphin County, 1947, Commonwealth Docket No. 113, in case of Commonwealth of Pennsylvania v. The Butler County National Bank. Judgment affirmed.
Charles E. Kenworthey, with him Roy J. Keefer, Joseph G. Robinson, Hull, Leiby & Metzger, and Reed, Smith, Shaw & McClay, for appellant.
George W. Keitel, Deputy Attorney General, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Musmanno and Arnold, JJ.
OPINION BY MR. JUSTICE JONES
The question presented by this appeal is whether unrealized appreciation on securities held for investment purposes should be used in determining the actual value of the capital shares of banks for taxation purposes under the provisions of the Act of July 15, 1897, P.L. 292, as amended, 72 PS § 1931. The question was answered in the affirmative by the learned court below which upheld the refusal of the Board of Finance and Revenue to review a settlement made by the Department of Revenue, and approved by the Auditor General, of the taxes owing by the appellant, The Butler County National Bank, for the year 1945.
Section 1 of the Act of 1897 imposes an annual tax of four mills on the "actual value" of the shares of capital stock of banks or savings institutions incorporated under any law of the Commonwealth or of the United States and located within the Commonwealth. A similar tax on actual value of capital shares ascertained in exactly the same manner is imposed by the Act of June 13, 1907, P.L. 640, as amended, 72 PS § 1991, on corporations doing a trust business within the Commonwealth. Since the method for computing the actual value of the shares of both the banking and trust companies is precisely the same (see Commonwealth v. Mortgage Trust Company of Pennsylvania, 227 Pa. 163, 76 A. 5), decisions under the Act of 1907 are equally pertinent to the present question.
The appellant is a corporation organized under the laws of the United States and engaged in the banking business within Pennsylvania. It its share-tax report for the year 1945, filed in compliance with the Act of 1897, the appellant claimed a total valuation for its capital stock, surplus and undivided profits of $1,661,059 for a value of $276.84 per share. The Department of Revenue, however, determined that the total valuation should be § 2,640,585 or $440.09 per share and resettled the report and tax accordingly. This upward adjustment was arrived at by adding $979,526 to the valuation as reported by the bank. Of this additional sum, $293,951 represented unallocated valuation reserves and the balance ($685,575) represented the amount of the unrealized appreciation on securities held by the bank for investment. In other words, the $685,575 was the difference between the aggregate cost of such securities, as reflected by the books of the bank, and the aggregate market value of the same securities as of December 31, 1945. It is this added valuation of $685,575 which this appeal questions.
It is the appellant's contention that the legislature, by the Act of 1897, intended that the fiscal officers of the Commonwealth should determine "the amount of capital stock paid in, the surplus and undivided profits" from the books of the bank, provided the books are kept in accordance with proper accounting procedures which do not permit banks to consider and reflect on their books unrealized appreciation of assets. The appellant bases this contention on the Act's provision that "the actual value of each share of stock [shall] be ascertained and fixed by adding together the amount of capital stock paid in, the surplus and undivided profits, and dividing this amount by the number of shares", and reminds us that the statutory language is to be construed in accordance with the accepted meaning of the words employed and that a tax Act is to be construed strictly, citing Statutory Construction Act of 1937, P.L. 1019, Secs. 33 and 58, 46 PS §§ 533 and 558.
There is, however, a further cardinal rule of statutory construction which the appellant apparently overlooks and that is that "Every law shall be construed, if possible, to give effect to all its provisions": Statutory Construction Act, supra, Sec. 51, 46 PS § 551. Here, the Act lays the tax on the "actual value" of the bank shares. That provision, the appellant entirely disregards and asserts that the capital stock paid in, the surplus and undivided profits of a bank are to be determined according to the books of the bank and that the share valuation, so ascertained, is what the Act was intended to tax. The appellant deduces this argument from the fact that in the field of ...