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TAX REVIEW BOARD v. C.J. DEVINE & CO. (07/25/57)

July 25, 1957

TAX REVIEW BOARD
v.
C.J. DEVINE & CO., APPELLANT.



Appeal, No. 89, Oct. T., 1957, from judgment of Court of Common Pleas No. 4 of Philadelphia County, Dec. T., 1955, No. 2686, in case of Tax Review Board v. C.J. Devine & Co. Order affirmed.

COUNSEL

James F. McMullan, with him Clark, Ladner, Fortenbaugh & Young, for appellant.

David Berger, City Solicitor, with him Lawrence Prattis, Assistant City Solicitor, and Jacob J. Siegal, Assistant City Solicitor, for appellee.

Before Hirt, Gunther, Wright, Woodside, Ervin, and Watkins, JJ. (rhodes, P.j., absent).

Author: Woodside

[ 184 Pa. Super. Page 299]

OPINION BY WOODSIDE, J.

The appellant, C. J. Devine & Co., a securities dealer which deals solely in federal, state and municipal securities, seeks a refund of the mercantile license fees and the mercantile taxes which it paid to the City of Philadelphia for the years 1953 and 1954. The refunds were denied by the Revenue Commissioner of Philadelphia, the Tax Review Board of Philadelphia, and the Court of Common Pleas No. 4 of Philadelphia County. The appeal to this Court followed.

The appellant is a non-resident partnership with its principal office and place of business in New York City, and a branch office in Philadelphia. Under the provisions of Section 2 of The Pennsylvania Securities Act of June 24, 1939, P.L. 748, 70 PS § 31, et seq. as reenacted and amended, the business of the appellant is such that neither it nor any of its employees are required to be licensed under that act. The evidence indicates that the appellant is the only securities dealer in Philadelphia not subject to regulation by the Pennsylvania Securities Commission. The evidence also shows that the appellant is in competition with registered dealers in Philadelphia who deal in governmental securities as well as the securities which require their registration under The Pennsylvania Securities Act.

The ordinance under which the appellant paid the tax which he seeks to recover is the Philadelphia Mercantile License Tax Ordinance, Code of General Ordinances, Chapter 19-1000, which imposes a tax and fee on certain businesses and professions including all "financial businesses". Appellant is a financial business within the meaning of the ordinance.

The ordinance was passed under the Sterling Act of August 5, 1932, P.L. 45, 53 PS § 4613 which provides inter alia that the city "council shall not have authority to levy, assess and collect, ... any tax on a privilege,

[ 184 Pa. Super. Page 300]

    transaction, subject or occupation or on personal property which is now or may hereafter become subject to a State tax or license fee." A "license fee" within the meaning of this statute must be equated to the probable cost of regulation and supervision of the licensees' activities and not merely a nominal charge imposed by the sovereign for the privilege of doing certain acts. National Biscuit Co. v. Philadelphia, 374 Pa. 604, 98 A.2d 182 (1953); Philadelphia Coca-Cola Bottling Co. v. Philadelphia, 382 Pa. 299, 115 A.2d 207 (1955).

Dealers in securities who are required to register and pay a license fee to the state under The Pennsylvania Securities Act of 1939, supra, pay a true license fee within the meaning of the Sterling Act of 1932, supra, and are, therefore, not taxable by the ...


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