Appeal, No. 335, Jan. T., 1954, from judgment of Court of Common Pleas No. 2 of Philadelphia County, Sept. T., 1953, No. 4711, in case of Honorbilt Products, Inc. v. City of Philadelphia. Judgment affirmed.
Jerome J. Shestack, First Deputy City Shlicitor, with him Mitchell S. Lipschutz, Assistant City Solicitor, Abraham Wernick, Deputy City Solicitor, and Abraham L. Freedman, City Solicitor, for appellant.
Bernard Wolfman, with him Marvin Katz, and Wolf, Block, Schorr & Solis-Cohen, for appellee.
Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.
OPINION BY MR. JUSTICE CHIDSEY
The plaintiff, honor-bilt Products, Inc., brought an action in assumpsit to recover from the defendant, City of Philadelphia, the sum of $5,191.51, representing taxes and penalties for the year 1953 alleged to have been illegally collected by the City under its Mercantile License Tax Ordinance of December 9, 1952, as amended. The ordinance imposed a tax of 3 mills on the gross volume of business transacted within the city by the taxable. The City filed an answer denying liability, and by stipulation the case was heard by the court without a jury on the complaint, answer and depositions. Judgment was entered for the plaintiff in the amount of its claim and the City appeals therefrom.
The facts essential to the determination of the controversy are not in dispute. Plaintiff, whose business is conducted in Philadelphia, manufactures for sale mattresses and upholstered box springs. Its business is regulated and supervised by the Bedding and Upholstery Division of the State Department of Labor and Industry under the Bedding and Upholstery Act of May 27, 1937, P.L. 926, as amended, 35 PS § 972 et seq. This Act, designed to protect the public from unsanitary bedding and upholstered products and to compel the manufacturer to disclose to the consumer the nature of the ingredients used in his products by Section 8(a), makes it illegal to sell or have in one's possession for the purpose of selling, mattresses, upholstered box springs and kindred articles unless an adhesive stamp prepared and issued by the Department of Labor and Industry is affixed to a tag which, in turn, must be attached to the mattress or spring. The tag must state the kinds of materials used in filling the article, the approximate percentages when mixed, and the number of the sterilizing and disinfecting permit issued by the Department where such a process is engaged in. Section 6 of the Act makes this permit a prerequisite to such processing. Under Section 8(c) the adhesive stamps must be purchased from the Secretary of Labor and Industry in quantities of not less than one thousand at a charge of $15 per thousand. Plaintiff's manufacturing operations necessitate the use of a sterilizing and disinfecting process, for which it must obtain the permit mentioned at an initial fee of $25 and an annual renewal fee of $5. The plaintiff has paid these charges and also the fees for the stamps required to be affixed to its products. Payments of the latter made by the plaintiff to the Commonwealth amounted to $1,000 in 1952 and $1,200 in 1953. The Commonwealth's total receipts from payments for the stamps required by the
Act were $109,420 in 1952 and $125,415 in 1953. Its total receipts for processing permits were $1,194 for 1952 and $2,796 for 1953.The total cost of administering the Act and the authorized regulations adopted thereunder was $60,480 in 1952 and $67,022 in 1953. A breakdown of the last mentioned figures shows that but a small percentage of the cost of the Department's operation was allocable to clerical and general office expenses and that the remaining expenditure was for regulation and inspection of those amenable to the Act. Field representatives of the Department conduct inspections of sterilizing and disinfecting processes employed, for the sampling of materials which are subjected to chemical analysis, and for prosecution and imposition of criminal penalties prescribed by the Act for violation of its provisions or the regulations promulgated by the Department. Each inspection takes from one to eight hours. Every manufacturer of mattresses and upholstery products is inspected more than once a year. Plaintiff was visited by inspectors seven times during 1952 and 1953. The overwhelming bulk of mattresses, pillows and upholstered products is inspected at one stage or another before reaching the ultimate consumer.
The basis of plaintiff's action is that the City had no power to impose upon it the tax in question because the Sterling Act" (Act of August 5, 1932, P.L. 45, 53 PS § 4613) prohibits the City from levying a tax on a privilege, transaction, subject or occupation "... which is now or may hereafter become subject to a State tax or license fee ...", and that the fees it paid for stamps under Section 8(a) of the Bedding Act constitute license fees imposed by the Commonwealth. The City's position is that the stamp fees are ...