without payment of the tax. It will be so considered here.
The applicable Pennsylvania statute at the time the attempted recordation was made in the Knapp case was as follows (Section 3 of the Pennsylvania Realty Transfer Tax Act of December 27, 1951, P.L. 1742, as re-enacted and amended, 72 P.S. § 3285):
'Every person who makes, executes, delivers, accepts, presents for recording any document or in whose behalf any document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction or any part thereof, or for or in respect of the vellum parchment or paper upon which such document is written or printed, a State tax at the rate of one (1) percentum of the value of the property represented by such document, which State tax shall be payable at the time of making, execution, delivery, acceptance or presenting for recording of such document.'
The opinion in Knapp, supra (168 F.Supp. 392), stated as follows:
'The circumstances forming the basis of the above Opinion having occurred prior to the enactment of certain amendments of June 1, 1955, to the Pennsylvania Realty Transfer Tax Law, the above decision applies only to documents made by the United States Marshal prior to June 1, 1955.'
The pertinent amendment of June 1, 1955, thus referred to is as follows (P.L. 322, Sec. 2, 72 P.S. § 3285.1):
'The tax herein imposed shall be fully paid, and have priority out of the proceeds of any judicial sale of real estate before any other obligation, claim, lien, judgment, estate or costs of the sale and of the writ upon which the sale is made, and the sheriff, or other officer, conducting said sale, shall pay the tax herein imposed out of the first moneys paid to him in connection therewith.'
The entire problem presented in the instant case was fully covered by the writer of this opinion in the Knapp case. I adhere to everything stated therein. The sole question here is, Did the amendment of June 1, 1955, change the law in any regard from that as we found in Knapp prior to the amendment? My conclusion is that it did not. As stated in Knapp, supra:
'In Sablosky v. Messner, 372 Pa. 47, 51, 92 A.2d 411, 413, the Supreme Court of Pennsylvania, in referring to The Realty Transfer Tax Act, said, inter alia:
"* * * we think it is reasonably apparent that the legislative purpose here was to impose one tax upon the transaction with liability by both parties thereto for its payment. * * *"
In Pittman v. Home Owners' Loan Corp., 1939, 308 U.S. 21, 60 S. Ct. 15, 17, 84 L. Ed. 11 (involving a tax on the privilege of recording the instrument and the statute is silent as to the one who shall pay the tax), the Court quotes with approval from Federal Land Bank of New Orleans v. Crosland, 1923, 261 U.S. 374, 43 S. Ct. 385, 67 L. Ed. 703 (tax imposed on lender) that "whoever pays it it is a tax upon the mortgage and that is what is forbidden by the law of the United States."
It is common practice on real estate foreclosures to save poundage for plaintiff in bidding to protect his lien to bid merely costs and taxes. Whether the Government in the instant case did that or bid debt, interest, cost and taxes, the result is the same, -- the United States is being taxed and that cannot be.
I conclude that the amendment of June 1, 1955 (72 P.S. § 3285.1) added nothing of consequence so far as this problem is concerned to the Act of December 27, 1951, as amended (72 P.S. § 3285); that the tax imposed by The Realty Transfer Tax Act of Pennsylvania, as amended, and as imposed by the Secretary of Revenue on the transaction here involved, is forbidden by the law of the United States and that the Secretary of Revenue should be restrained from further attempting to impose the said tax on the said transaction.
Now, October 26, 1961, in accordance with opinion this day filed, it is ordered and decreed that the Secretary of Revenue be, and he is hereby, restrained from further attempting to impose the said tax on the said transaction, and it is further ordered and decreed that he be, and he is hereby, directed to cause the deed in question to be accepted for recordation without payment of the Pennsylvania Realty Transfer Tax.
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