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CARHEART CORPORATION v. COMMONWEALTH (04/06/72)

decided: April 6, 1972.

CARHEART CORPORATION
v.
COMMONWEALTH



Appeal from the Decision of the Board of Finance and Revenue in case of Petition for Review of Carheart Corporation. Appeal transferred September 1, 1970, from the Court of Common Pleas of Dauphin County to the Commonwealth Court of Pennsylvania.

COUNSEL

William P. Thorn, with him Wolf, Block, Schorr and Solis-Cohen, for appellant.

George W. Keitel, Deputy Attorney General, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer and Rogers. Opinion by Judge Kramer.

Author: Kramer

[5 Pa. Commw. 195 Page 196]

This is an appeal by the Carheart Corporation (Carheart) from a determination of the Board of Finance and Revenue (Board), refusing Carheart's petition for a review of the Board's prior refusal of a petition for resettlement. The Board thereby sustained the action of the Department of Revenue and the Auditor General in the settlement of the franchise tax liability of Carheart for the year 1958.

In accordance with Section 14 of the Fiscal Code, Act of July 13, 1957, P.L. 838, Section 1104, 72 P.S. § 1104, appeal was timely taken on July 28, 1961, to the Court of Common Pleas of Dauphin County sitting as the Commonwealth Court. Following the creation of this Court under and by virtue of the Commonwealth

[5 Pa. Commw. 195 Page 197]

Court Act, Act of January 6, 1970, P.L. (Act No. 185, 1969), 17 P.S. § 211.1, et seq., this case was transferred to this Court in 1970. After correspondence by this Court with counsel for the Commonwealth of Pennsylvania and Carheart, the parties hereto filed a stipulation of facts on October 6, 1971, which dispensed with the necessity for a trial by jury under the provisions of the Act of April 22, 1874, P.L. 109, 12 P.S. § 688. After the submission of briefs and oral argument, the matter is now ripe for determination by this Court.

Findings of Fact

The stipulation of facts filed by the parties is adopted substantially as the Findings of Fact by the Court. They are as follows:

1. Carheart Corporation (Carheart) was incorporated on January 20, 1933, pursuant to the provisions of an act of the Legislature of the State of Delaware, entitled "An Act providing a general corporation law" (approved March 10, 1899) and the acts amendatory thereto.

2. Carheart's Pennsylvania franchise and corporate net income tax report for the year 1958 was filed timely.

3. On May 11, 1960, a copy of the settlement of Carheart's franchise tax report by the Department of Revenue and the Auditor General was mailed to Carheart.

4. This settlement valued Carheart's capital stock at $1,000,000.00.

5. The taxable proportion was settled at 71.5066%, the same as reported by Carheart on its tax return.

6. Carheart filed a Petition for Resettlement with the Secretary of Revenue and the Auditor General on June 8, 1960.

7. Carheart's Petition for Resettlement was refused by a notice mailed November 28, 1960.

[5 Pa. Commw. 195 Page 1988]

. Carheart filed a Petition to Review this refusal of resettlement with the Board of Finance and Revenue on January 25, 1961.

9. By an order mailed June 2, 1961, the Board of Finance and Revenue refused Carheart's Petition for Review and sustained the action of the Department of Revenue and the Auditor General.

10. The valuation of Carheart's stock for franchise tax purposes used by the Commonwealth included the value of stock of The Meadville Corporation ("Meadville") owned by Carheart which was excluded by Carheart in its valuation on its return as filed.

11. The purposes of Carheart as stated in its Certificate of Incorporation are, inter alia, as follows:

"To acquire by purchase, subscription or otherwise, hold, own, sell, mortgage, pledge and otherwise dispose of, exchange, transfer, assign, deal in and with stocks, bonds, mortgages, debentures, obligations, evidences of indebtedness and securities issued by any public or private corporation, government or municipality, domestic and foreign or otherwise; to exercise and enjoy all the rights, powers and privileges of ownership of all shares of stock, bonds, mortgages, debentures, evidences of indebtedness and choses in action at any time, held or acquired by it, including the right to vote, collect and dispose of dividends on said shares of stock, and to enforce, collect, receive and dispose of the interest and principal of all such bonds, mortgages, debentures and evidences of indebtedness and choses in action.

"To buy, sell, exchange, lease and otherwise acquire, hold, own, maintain, control, work, develop, improve, alter, operate, mortgage, let, rent, convey, deal in and otherwise turn to account, real estate, chattels and personal property of every class and description.

"To inform, promote, organize, reorganize, liquidate, underwrite, finance, manage and operate the properties

[5 Pa. Commw. 195 Page 199]

    or business of any and all corporations, firms, partnerships or individuals and to give any guarantee in connection therewith or otherwise for the payment of money or for the performance of any obligation or undertaking.

"To carry on and undertake any business undertaking, transaction or operation commonly carried on or undertaken by capitalists, underwriters, promoters, financers, contractors, merchants, commission men and agents, and in the course of such business to draw, accept, acquire and sell all or any negotiable or transferable instruments and securities, including debentures, bonds and notes.

"To manufacture, purchase or otherwise acquire goods, wares, merchandise and personal property of every class and description, and hold, own, mortgage, sell or otherwise dispose of, trade, deal in and deal with the same.

"To acquire and undertake the good-will, property, rights, franchises, contracts and assets of every manner and kind and the liabilities of any person, firm, association or corporation, either wholly or in part, and pay for the same in cash, stock or bonds of the corporation or otherwise.

"To hold, purchase, or otherwise acquire, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock and bonds, debentures or other evidences of indebtedness created by any corporation or corporations, and, while the holder thereof, exercise all the rights and privileges of ownership, including the right to vote thereon.

"To conduct business in the State of Delaware and elsewhere, including any of the states, territories, colonies

[5 Pa. Commw. 195 Page 200]

    or dependencies of the United States, the District of Columbia and any and all foreign countries, have one or more offices therein, and therein to hold, purchase, let, mortgage and convey real and personal property, except as and when forbidden by local law.

"With a view to the working and development of the properties of the corporation, and to effectuate, directly or indirectly, its objects and purposes, or any of them, the corporation may, in the discretion of the Directors, from time to time carry on any other lawful business, manufacturing or otherwise, to any extent and in any manner not unlawful.

"The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes."

12. Carheart's statutory office in the State of Delaware during 1958 was 927 Market Street Wilmington, and its statutory agent in Delaware was Corporation Guarantee and Trust Company.

13. On October 2, 1933, Carheart was issued a Certificate of Authority to do business in Pennsylvania under the provisions of Article X of the "Business Corporation Law" (Act No. 106) approved May 5, 1933.

14. The purpose clause of the Pennsylvania Certificate of Authority reads as follows: ". . . grant unto such corporation a Certificate of Authority, to transact in the Commonwealth of Pennsylvania the business of to buy, sell and generally deal in and with real estate and to acquire, purchase, own, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of and deal in stocks, bonds, mortgages, securities, notes and commercial papers."

[5 Pa. Commw. 195 Page 20115]

. Carheart's registered office in Pennsylvania during 1958 was 61 Raynham Road, Merion, Pennsylvania.

16. 61 Raynham Road, Merion, Pennsylvania was the home of Max Levinson until 1952. In that year he sold this house and moved to 1510 Van Buren Street, Hollywood, Florida.

17. Through inadvertence the registered office of Carheart in Pennsylvania was not changed after Mr. Levinson moved from that address.

18. Carheart's total outstanding stock consists of 200 shares no par value common stock owned as follows:

Max Levinson 120 shares

Ralph Levinson, Joseph J. Gabel and

Joel Claster, Trustees under agree-

     ment of inter vivos trust for Arthur

Levinson 26-2/3 shares

Ralph Levinson, Joseph J. Gabel and

Joel Claster, Trustees under agree-

     ment of inter vivos trust for Carl

Levinson 26-2/3 shares

Ralph Levinson, Joseph J. Gabel and

Joel Claster, Trustees under agree-

     ment of inter vivos trust for Helen

Levinson Doroshow 26-2/3 shares

200 shares

19. The tax returns of the trusts are filed in Jacksonville, Florida, showing the address of Joseph J. Gabel, Trustee, Hollywood, Florida.

20. During 1958 Carheart's directors were Max Levinson, Ralph Levinson and Morton Sand.

21. Carheart's officers are:

President: Max Levinson

Vice President: Morton Sand

[5 Pa. Commw. 195 Page 202]

Secretary: Morton Sand

Treasurer: Max Levinson

22. Max Levinson resides at 1510 Van Buren Street, ...


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