Appeal from decree of Court of Common Pleas of Philadelphia County, March T., 1953, No. 3292, in case of Abbotts Dairies, Inc. et al. v. City of Philadelphia et al.
Roland Morris, with him Duane, Morris & Heckscher, for appellants.
Levy Anderson, First Deputy City Solicitor, with him Thomas A. Matthews, Assistant City Solicitor, and Edward G. Bauer, Jr., City Solicitor, for City of Philadelphia et al., appellees.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Roberts. Dissenting Opinion by Mr. Justice Cohen. Mr. Justice Eagen and Mr. Justice O'Brien join in this dissent.
Effective January 1, 1953, the City of Philadelphia enacted a Mercantile License Tax upon persons and
companies engaged in certain business activities within the city. This tax was authorized by the Sterling Act, Act of August 5, 1932, P. L. 45, § 1, as amended, 53 P.S. § 15971. The appellants, however, believed that the imposition of the tax as to them was a violation of the exemption for state licensed companies contained in the Sterling Act. Therefore, in early 1953 they successfully sought a perpetual injunction prohibiting the city from taxing them under the Mercantile License Tax. This injunction continued in full force and effect until 1968, when it was modified at the request of the city.
This modification was apparently precipitated by this Court's decisions in Y.M.C.A. v. Reading, 402 Pa. 592, 167 A.2d 469 (1961), Pinebrook Foundation, Inc. v. Shiffer, 416 Pa. 379, 206 A.2d 314 (1965), and Bell Telephone Co. v. Philadelphia, 421 Pa. 14, 218 A.2d 727 (1966). These decisions answered the question whether "an erroneous interpretation of a taxing statute by a tax official supports his being prohibited from again enforcing that taxing statute against the decree winner." We concluded that "such action may not be proscribed." Bell Telephone Co. v. Philadelphia, supra at 16.
It is conceded by all parties to this litigation that the injunction the appellants obtained in 1953 falls within the prohibited class of injunctions established in the Y.M.C.A.-Pinebrook Foundation, Inc.-Bell Telephone Co. line of cases. Therefore, the decision by the court below to modify the 1953 injunction is essentially correct. The only issue presented for our consideration is whether the injunction should have been modified as it was -- to only enjoin the collection of the Mercantile License Tax through the end of 1953 -- or whether the injunction should have been modified so as not to affect those tax years prior to the city's challenge of the
decree and its initiation of the modification proceedings in 1967.
The city argues that the modification of the decree should be completely retroactive. To support this proposition it cites both the Bell Telephone and Pinebrook Foundation cases. In both of these, the modification of the decree resulted in completely retroactive application of the rule against enjoining the collection of taxes. In opposition, appellants cite this Court's disposition in the original decree modification case, Y.M.C.A. v. Reading, and certain equitable principles which should be given effect in a situation such as this one. Specifically, appellant quotes from Y.M.C.A. : "Because of the parties' reliance upon past practice and ...