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July 21, 1955


Appeal, No. 322, Oct. T., 1954, from decree of Court of Common Pleas No. 1 of Philadelphia County, March T., 1954, No. 935, in case of Samuel M. Freeman et al., trading as Samuel T. Freeman and Co. v. City of Philadelphia, George S. Forde, Revenue Commissioner, and Walter Pytko, Commissioner, etc. Decree affirmed.


Paul Freeman, with him freeman, Fox & Fiechter, for appellants.

Jerome J. Shestack, First Deputy City Solicitor, with him Jacob J. Siegal, Assistant City Solicitor, James L. Stern and Abraham Wernick, Deputy City Solicitors, and Abraham L. Freedman, City Solicitor, for appellees.

Before Rhodes, P.j., Hirt, Ross, Gunther, Wright, Woodside and Ervin, JJ.

Author: Ross

[ 178 Pa. Super. Page 292]


Appellants initiated this action by a complaint in equity to restrain the City of Philadelphia from collecting a tax levied against auctioneers. The court below dismissed the complaint and this appeal followed.

On February 23, 1945 the City of Philadelphia passed an ordinance "imposing a tax on all persons, firms, corporations and associations carrying on the business of auctioneers; providing for the collection thereof, and for the registration of such persons, firms, corporations and associations, and imposing penalties". The tax imposed is $500 per year. Appellants paid the tax from 1945 to 1953 and this action was to prevent its collection for 1954. Three grounds are asserted as invalidating the tax: (1) That the "tax", although so called throughout the ordinance, is in reality a license fee "and since it was enacted solely to raise and does raise revenue it is void under the decision in Flynn v. Horst, [356 Pa. 20, 51 A.2d 54]"; (2) that if it is really a revenue measure it violates the constitutional requirement that tax measures be uniform upon the same class of subjects within the territorial limits of the levying authority; and (3) that the city had no power to enact the ordinance because the Sterling Act, Act of August 5, 1932, P.L. 45, 53 PS sec. 4613, prohibits the enactment of a tax on a

[ 178 Pa. Super. Page 293]

    privilege or occupation which the state then taxed. (From 1921 to 1943, when it was repealed, the state imposed a tax upon auctioneers.)

Appellants' first contention raises the question whether the charge of $500 a year on auctioneers is a "tax" or a "license fee". In Gunn Pontiac, Inc. v. Pittsburgh, 174 Pa. Superior Ct. 75, 99 A.2d 404, at page 79, we stated: "It would thus appear that a 'true' license fee is related in amount to the magnitude of the licensee's respective business activities and the corresponding expense of regulation thereof." Here there is a flat charge on auctioneers regardless of the amount of business done and no expense of regulation. While the title is always a part of a statute or ordinance and, as such, must be considered in construing the enactment (City Stores Co. v. Philadelphia, 376 Pa. 482, 103 A.2d 664), it is the substance of the law or ordinance, rather than the designation or name given it by the legislative body, that is controlling. Sterling v. Philadelphia, 378 Pa. 538, 106 A.2d 793. Here not only the title but the entire substance of the ordinance indicates that it is a taxing measure. It says nothing about regulating auctioneering and contains no provision for regulations. However, appellants contend that despite the fact that the ordinance purports only to raise revenue it is really a licensing measure enacted under the police power and thus void because all it does is raise revenue. This certainly is circuitous and specious reasoning. As observed by the learned court below: "[They] set up a straw man calling the tax a license fee under the police power and then seek to destroy it by the argument..." that it primarily raises revenue. Appellants, notwithstanding, contend that it is still a licensing measure because the tax is imposed for permission to engage in the business of auctioneering and the police power is relied upon to

[ 178 Pa. Super. Page 294]

    enforce its payment. We cannot agree that these are the conclusive tests, nor can we agree that this ordinance imposes the fee for permission to engage in the business. As we interpret the ordinance, it imposes an occupation tax by virtue of the authority given by the Sterling Act. It thus provides, inter alia, that those engaged in the business of auctioneering at the date of its enactment shall register with the city treasurer and pay the tax before a certain date and shall pay the annual tax on January first of each year thereafter. As to persons or firms which were not in business at the time the ordinance was enacted it provides that they shall register and pay the tax prior to their entry into such business. Civil remedies (penalties, costs and interest) are provided for collection as well as criminal penalties for violation of the provisions of the ordinance or for carrying on the business of auctioneering without payment of the tax and registering. We cannot see, as appellants contend, how these provisions indicate that the fee is imposed for permission to engage in business. These provisions are nothing more than enforcement provisions. Keeping in mind that this is an occupation tax, we can see no more effective manner of enforcing it than by providing penalties for engaging in the occupation without paying the tax. We agree that the police power is used to enforce the measure, but it is so used in all revenue measures and it does not follow that the ordinance was enacted under the police power. The requirement ...

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