Appeals, Nos. 124 and 125, March T., 1958, from judgment of County Court of Allegheny County, Nos. A785 and A786 of 1957, in case of Jefferson Grocery Company of Pittsburgh v. City of Pittsburgh et al. Judgment affirmed.
Regis C. Nairn, Assistant City Solicitor, with him J. Frank McKenna, Jr., City Solicitor, for City of Pittsburgh, appellant.
Niles Anderson, Solicitor, for School District of Pittsburgh, appellant.
William H. Eckert, with him Edward J. Greene, Jacob A. Markel, and Eckert, Seamans & Cherin, and Markel & Markel, for appellee.
Before Jones, C.j., Bell, Musmanno, Jones and Cohen, JJ.
OPINION BY MR. JUSTICE COHEN.
In Philadelphia School District, Appellant v. Frankford Grocery Co., 376 Pa. 542, 103 A.2d 738 (1954), we held that the Frankford Grocery Company was not taxable under the Act of May 23, 1949, P.L. 1669, 24 P.S. § 584.1, which provides that every person engaging in any business in any school district of the first class shall pay an annual tax, and defines business as "carrying on or exercising for gain or profit" any trade, business or commercial activity.
The Frankford Grocery Company was a buying organization established by individually-owned grocery stores. These stores pooled the purchases of their merchandise requirements so that they would be in a position to compete economically with the large food chains. The stock in Frankford was owned by the individual grocery stores that the company served and the dividends (actually discounts) were determined by the amount of the merchandise acquired by the individual stores from Frankford.
This was not a new or unique form of merchandising. Cooperatives, similar to Frankford, have flourished in every community and through them "corner groceries" have successfully competed with the chain stores and have contributed to reducing the cost of food distribution. There is no doubt that the individually-owned "corner grocery store" has been saved from economic annihilation by the so-called "cooperatives." Since the business contemplated by the Act of 1949
meant business carried on for "gain or profit," and since the function of Frankford as a company was not for gain or profit but rather a service to the individually-owned and operated stores, we held they were not taxable under that act.
We must now determine whether Jefferson Grocery Company, which was established to perform the same functions as Frankford for eighteen grocery stores, each owned by the same owners, is subject to the Mercantile Tax Ordinance of the City of Pittsburgh*fn1 and the Mercantile License Tax Act of the School District of Pittsburgh.*fn2 Although the rates of the act and the ordinance are dissimilar,*fn3 both assess the taxes on the gross receipts of a "wholesale dealer or wholesale vendor."*fn4 The ...