Appeal from order of Court of Common Pleas No. 4 of Philadelphia County, Dec. T., 1962, No. 1973, in case of Alan Wood Steel Company v. School District of Philadelphia.
Park B. Dilks, Jr., with him Morgan, Lewis & Bockius, for appellant.
Joseph W. Marshall, with him Edward B. Soken, for appellee.
Bell, C. J., Musmanno, Jones, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Cohen took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Roberts. Mr. Justice Eagen joins in this dissenting opinion.
The Department of Collections of the City of Philadelphia, acting as tax collector for the School District of Philadelphia (School District) in December, 1962, mailed to Alan Wood Steel Company (taxpayer), a Pennsylvania corporation, at its principal office in Conshohocken, Montgomery County, a bill for a mercantile license tax of $73,654.40 and a general business tax of $24,550.45, based upon an estimate of taxpayer's receipts during the years 1958-1962 from sales to its customers located in Philadelphia.*fn1 Upon receipt of the bill for the general business tax, the taxpayer filed an appeal to the Court of Common Pleas No. 4 of Philadelphia
County upon the grounds that: (a) the venue was improper since the School District could not validly institute an action in Philadelphia County to collect this tax by simply mailing a bill to the taxpayer located in Montgomery County; (2) the assessment was erroneous, in fact and in law, because the taxpayer was not engaged in business in Philadelphia and did not make sales in that city.
The matter came before Judge Theodore Reimel who directed that depositions be taken. These depositions reveal the following facts and constitute the record before us: (1) prior to June 30, 1957, the taxpayer maintained a Philadelphia office and paid both the general business and the mercantile license tax; (2) by reason of a decline in business, the taxpayer gave up its branch office in Philadelphia and, thereafter, neither filed returns nor paid taxes, (3) the taxpayer's sole manufacturing plant is in Conshohocken, Montgomery County, it has mines in New Jersey and maintains solicitation or promotional offices in Bala Cynwyd, Montgomery County and in four out-of-state locations; (4) since June 30, 1957, the taxpayer has not maintained in Philadelphia any plant, manufacturing facility, warehouse, stock or inventory of goods, office or place of business, and has not entered into any sales contracts therein; (5) the taxpayer, which manufactures and sells steel and steel products, normally receives orders for its products from customers, by telephone or mail, at its manufacturing plant and general office in Conshohocken and, if any orders are telephoned or mailed to its promotional offices, such orders are forwarded to the Conshohocken office for acceptance or rejection, the promotional offices lacking any authority to accept or reject orders; (6) no C.O.D. sales are made, all sales being made F.O.B. Conshohocken; (7) delivery of taxpayer's products is made by facilities not owned by the taxpayer, the freight being
paid by the customer; (8) twenty-five "promotion men" work for the taxpayer of whom only three work out of the Bala Cynwyd office and these three men spend not more than 30% of their time in promoting the taxpayer's relationship with Philadelphia customers; (9) none of the "promotion men" live in Philadelphia and they are simply "good-will agents" without any authority to take orders from customers, to make credit investigations, or to handle collections; (10) if a complaint concerning taxpayer's products is made, the taxpayer may send a "promotion man", or, if engineering knowledge is necessary, one of its fifteen metallurgists to investigate and ascertain the facts; (11) none of the taxpayer's metallurgists live in Philadelphia and "only a couple" of the metallurgists spend any time, albeit "very slight", in Philadelphia; (12) the taxpayer holds its corporate meetings in Conshohocken, maintains its bank account with the Philadelphia National Bank with which it deals through the bank's Conshohocken branch, maintains two listings in the telephone directory setting forth its Conshohocken and Bala Cynwyd addresses and advertises in trade journals of general circulation, some of which "infiltrate into the city".
On the basis of the depositions, Judge Weinrott denied the taxpayer's appeal and, upon a petition under Rule 68 1/2 of this Court, we granted certiorari. Upon this appeal, two issues are presented: (a) was the venue proper? and (b) is the taxpayer liable for the payment of a general business tax?
The general business tax (levied under Act of May 23, 1949, P. L. 1669, 24 P.S. § 584.1 et seq.) is imposed by the Commonwealth of Pennsylvania for the School District of ...