Appeal from decree of Court of Common Pleas, Trial Division, of Philadelphia, June T., 1970, No. 4047, in case of United Tavern Owners of Philadelphia et al. v. School District of Philadelphia and Thomas W. Rogers, Commissioner of School Revenue.
Patrick T. Ryan, with him Drinker, Biddle & Reath, for appellants.
Nathan L. Posner, with him Israel Packel, John J. McCreesh, Jr., and Fox, Rothschild, O'Brien & Frankel, and McCreesh & McCreesh, for appellees.
Bell, C. J., Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice O'Brien. Mr. Chief Justice Bell and Mr. Justice Roberts concur in the result. Mr. Justice Jones took no part in the consideration or decision of this case. Mr. Justice Cohen took no part in the decision of this case. Dissenting Opinion by Mr. Justice Pomeroy. Mr. Justice Eagen joins in this dissent.
On June 4, 1970, the City of Philadelphia enacted an ordinance amending § 19-1800 of The Philadelphia
Code by adding a new section authorizing the Board of Education of the School District of Philadelphia to impose a tax of ten percent on the retail sales of liquor and malt and brewed beverages in hotels, restaurants, taverns or clubs within the City of Philadelphia.
On June 8, 1970, pursuant to the enabling ordinance, the Board of Education of the School District of Philadelphia adopted a resolution imposing and levying the ten percent tax.
On June 18, 1970, the restaurant, hotel and tavern associations, two restaurants, one tavern, and an officer of the tavern association, who together are the appellees, brought an action in equity requesting that the appellants be enjoined from imposing, levying, assessing or collecting the tax. On July 9, 1970, Judge Hirsh filed his adjudication and decree nisi, permanently enjoining collection of the tax. The appellants filed exceptions, and on July 17, 1970, after hearing arguments, the court en banc directed that the decree be made final. The case now comes to us on appeal.
The case presents only one question: May the City of Philadelphia validly enact an ordinance taxing the retail sales of liquor, malt and brewed beverages?
The court below and the parties to this action have sought to discuss the doctrine of preemption as it applies to this case as two separate questions. First, has the state preempted the field through the enactment of the Liquor Code, Act of April 12, 1951, P. L. 90, Art. I, § 101, as amended, 47 P.S. § 1-101 et seq.? Second, has the state preempted the field through the enactment of the Commonwealth sales tax, Act of March 6, 1956, P. L. (1955) 1228, Art. I, § 1, as amended, 72 P.S. 3403-201(a), which imposed a six percent sales tax on liquor, and the enactment of the emergency act of June 9, 1936, Ex. Sess., P. L. 13, § 2, as amended, 47 P. S. § 795, which imposed an eighteen percent tax on liquor sold by the liquor control board?
The chancellor concluded against the validity of the tax on both issues, finding that the Commonwealth had totally preempted the field of legislation pertaining to liquor by its enactment of the comprehensive state Liquor Code, 47 P.S. 1-101 et seq., and had also specifically preempted the area of taxation on the sales of liquor by the specific wording of the Sterling Act.
The court en banc agreed with the chancellor insofar as the preemptive effects of the Liquor Code were concerned, but the court en banc did not believe that the Sterling Act had preempted the field of taxation on the sales of liquor.
Although we agree with both the chancellor and the court en banc in their final conclusion that the City of Philadelphia is barred from authorizing the imposition of the tax, we disagree with their analysis of the issues involved. In our view, in light of the doctrine of preemption which has developed in Pennsylvania jurisprudence, the state Liquor Code alone is not a sufficient indication of the Commonwealth's intention to preempt the entire field of legislation affecting liquor. Only when consideration is given to the two taxes which exist on liquor and the specific preemption doctrine enacted as part of the Sterling Act, as well as to the Liquor Code, can the conclusion be reached that the City of Philadelphia is barred from authorizing the imposition of a tax on the retail sales of liquor in hotels, restaurants, taverns or clubs.
At this point, it would be well to restate the general principles involved in determining when local governments in Pennsylvania have the power to act and when they are barred from acting, despite otherwise having the power, because the Commonwealth has preempted the field.
In Pennsylvania, cities have no power to act unless that power has been granted to them by the state legislative
body by an enabling act. Moreover, even when cities have been given powers to act, if the state has preempted the field in a specific area, then in that area cities have no power despite the wording of the enabling act on which they rely.
Our most recent statement on this general subject of preemption appears in Harris-Walsh, Inc. v. Dickson City Boro., 420 Pa. 259, 268-9, 216 A.2d 329, 333-4 (1966). There, we quoted at length from our opinion in the landmark case of West. Pa. Restaurant Assn. v. Pittsburgh, 366 Pa. 374, 380-1, 77 A.2d 616 (1951): "'(1) There are statutes which expressly provide that nothing contained therein should be construed as prohibiting municipalities from adopting appropriate ordinances, not inconsistent with the provisions of the act or the rules and regulations adopted thereunder, as might be deemed necessary to promote the purpose of the legislation. On the other hand there are statutes which expressly provide that municipal legislation in regard to the subject covered by the State act is forbidden. Then there is a third class of statutes which, regulating some industry or occupation, are silent as to whether municipalities are or are not permitted to enact supplementary legislation or to impinge in any manner upon the field entered upon by the State; in such cases the question whether municipal action is permissible must be determined by an analysis of the provisions of the act itself in order to ascertain the probable intention of the legislature in that regard. It is, of course, self-evident that a municipal ordinance cannot be sustained to the extent that it is contradictory to, or inconsistent with, a state statute: [citing an authority] . . . municipalities in the exercise of the police power may regulate certain occupations by imposing restrictions which are in addition to, and not in conflict with, statutory regulations: [citing authorities]. But if the general tenor of the statute indicates
an intention on the part of the legislature that it should not be supplemented by municipal bodies, that intention must be given effect and the attempted local legislation held invalid: [citing authorities].'"
Insofar as the Liquor Code is concerned, it is in the third class of statutes. The statute itself is silent as to whether municipalities are or are not permitted to enact taxation legislation relating specifically to the sales of liquor. The appellees disagree with this, emphasizing Section 1-104(a) of the statute, which specifically sets forth the following standard when interpreting the statute: "(a) This act . . . shall be deemed an exercise of the police power of the Commonwealth for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon, and all of the provisions of this act shall be liberally construed for the accomplishment of this purpose." They further remind us of our opinion in the Tahiti Bar, Inc. Liquor License Case, 395 Pa. 355, 360, 150 A.2d 112, 115 (1959), where we said: "There is perhaps no other area of permissible state action within which the exercise of the ...