Appeals, Nos. 32 and 33, March T., 1964, from judgments of County Court of Allegheny County, Nos. A 264 and A 263 of 1958, in cases of Herman Fineberg, trading as Industrial Uniform Company, v. School District of Pittsburgh and David A. Smith, Treasurer; and Same v. City of Pittsburgh and David A. Smith, Treasurer. Judgments reversed; reargument refused July 24, 1964. Appeals from imposition of additional mercantile license taxes.
Regis C. Nairn, Assistant City Solicitor, with him Niles Anderson, School Solicitor, and David W. Craig, City Solicitor, for appellants.
Abraham Pervin, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. JUSTICE COHEN
The School District and the City of Pittsburgh (appellants) claimed additional mercantile license taxes from Herman Fineberg, trading as Industrial Uniform Company (appellee), following their examination of his books and records. The basis of their claims was that Fineberg, who had reported and paid tax as a wholesaler, should have reported and paid tax as a retailer. Fineberg promptly paid the claimed amounts and appealed to the County Court of Allegheny County which sustained his position and ordered the additional amounts refunded. The City and School District appealed.
The parties have filed a statement of the case pursuant to Supreme Court Rule 53 in which they set forth the taxpayer's method of doing business. He purchases work clothing and sells it to industrial laundry service companies. These companies in turn rent the work clothing to their customers under an arrangement whereby clean clothing is delivered and dirty clothing picked up for laundering at regular intervals. The rental charge includes both the cost of the work clothing and the laundering service.
Under both the Act of June 20, 1947, P.L. 745, as amended, 24 P.S. §§ 582.1-582.13, levying a mercantile tax of one-half mill on wholesalers and one mill on retailers for the benefit of the School District, and the City ordinance, enacted under authority of the Act of
June 25, 1947, P.L. 1145, as amended, 53 P.S. §§ 6851-6857, levying a mercantile tax of one mill on wholesalers and two mills on retailers for the benefit of the City, a "wholesale dealer" or "wholesale vendor" is defined as one who sells to dealers or vendors.*fn1 In a series of cases we have held that the test of whether one is a wholesaler or retailer is whether his customers buy for the purpose of reselling. If they do, the taxpayer is a wholesaler; if they do not, he is a retailer. Kerchner, Marshall & Co. v. Pittsburgh, 406 Pa. 158, 176 A.2d 645 (1962); Paper Products Company v. Pittsburgh, 391 Pa. 87, 137 A.2d 253 (1958); Hughes v. Pittsburgh, 379 Pa. 145, 108 A.2d 698 (1954); Brown & Zortman Machinery Company v. Pittsburgh, 375 Pa. 250, 100 A.2d 98 (1953).
Fineberg, as well as the court below, relies strongly on the Paper Products case. There we held, inter alia, that a taxpayer who sold wrapping supplies to other persons, which other persons used them in connection with their sales of goods to customers, was a wholesale vendor because the taxpayer's customers transferred title to the wrapping supplies to the ultimate consumers and included the cost of such supplies in the markup of the goods sold. It is true in the present case that the cost of the uniforms is included by the laundry service companies in their rental charge, but it is equally true that title to the uniforms does not pass to the customers of the service companies. In other words, the service companies do not resell the uniforms. A ...