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decided: June 8, 1972.


Appeal from the Order of the Court of Common Pleas of Allegheny County in case of Alco Parking Corporation; Arena Parking, Inc.; Campus Parking, Inc.; Fourth Avenue Parking, Inc.; Grant Parking, Inc.; Harry W. Sheppard, Jr., t/a Stanwix Auto Park; John Cominos, t/a Liberty Parking; John Stabile and Rocco A. Del Sardo, t/a Wm. Penn Parking Lot; K-Seven Parking Company; Meyers Bros. Parking-Central Corp.; Parking Service Corporation, Inc.; Wm. Penn Parking Garage, Inc. v. City of Pittsburgh, No. 1699, April Term, 1970.


Leonard Boreman, with him Richard H. Martin and Baskin, Boreman, Sachs, Wilner, Gondelman & Craig, for appellants.

Leonard M. Marks, with him Gold, Farrell & Marks, for appellant Meyers Bros. Parking-Central Corporation.

Frederick A. Boehm, First Assistant City Solicitor, with him Ralph Lynch, Jr., City Solicitor, and Grace S. Harris, Special Assistant City Solicitor, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Rogers. Opinion by Judge Kramer, Concurring in Part and Dissenting in Part. Judge Mencer joins in this Opinion. Judge Crumlish, Jr., joins in this Opinion.

Author: Rogers

[ 6 Pa. Commw. Page 435]

The City of Pittsburgh in December 1969, pursuant to The Local Tax Enabling Act of December 31, 1965, P.L. 1257, 53 P.S. § 6901, et seq., enacted an ordinance imposing upon all parking transactions of operators of nonresidential parking places a tax at the rate of twenty per centum of the gross receipts from such transactions received during the year commencing February 1, 1970 and thereafter. The city has imposed a tax identical except as to rate since the year 1962, the ordinance imposing such prior to the year 1965 having been imposed under the Act of June 25, 1947, P.L. 1145, 53 P.S. § 6851, repealed and replaced by the Act of December 31, 1965, P.L. 1257. Under said ordinances the tax has been increased from ten per centum in 1962 to fifteen per centum in 1968 and by the ordinance here under attack to twenty per centum.

The appellants, parking lots operators, here sought in equity to restrain the city from enforcing the twenty

[ 6 Pa. Commw. Page 436]

    per centum ordinance effective February 1, 1970. The court below, after trial on the merits, made an adjudication nisi dismissing the complaint and, after exceptions filed and dismissed, a decree that its adjudication nisi should be entered as a final decree. This appeal followed.

The subject of municipal taxes upon the gross receipts of parking lot transactions has been the subject of considerable litigation. All save one of the appellants' contentions here have been conclusively decided against them, and we will not burden this opinion by a lengthy repetition of the reasoning of such definitive holdings.

The appellants suggest that under the equal protection clause of the Fourteenth Amendment of the United States Constitution and uniformity clause of Article VIII, Section one*fn1 of the Constitution of Pennsylvania, their business may not be singled out for this tax. Their fire comes from two barrels: first, that there is no rational basis for distinguishing the commercial parking business from other businesses and second, that there is no such basis for distinction between nonresidential and residential parking. Unfortunately for the appellants the targets at which they aim have been long since removed from the range. In Philadelphia v. Samuels, 338 Pa. 321, 12 A.2d 79 (1940), the Supreme Court upheld for the purpose of a tax identical to that in the instant case by implication a classification of parking lots as distinguished from other businesses and explicitly the classification of open parking lots as distinguished from closed parking lots, writing: "Another contention is that the ordinance is bad as discriminating against open parking lots in favor of closed

[ 6 Pa. Commw. Page 437]

    garages engaged in parking. It has not been shown that the municipal legislature did not have reasonable ground for separating open parking lots from closed garages and placing them in separate classes for the purpose of taxing the parking transaction in the open lot. The growth of such parking in recent years is [a] matter of common knowledge of which the courts take notice. Generally, the operation of such lots involves more extensive use of sidewalk and street than is involved in the operation of the closed garage; land occupied by a closed garage is assessed at the value of land and buildings, whereas the open parking lot is assessed without buildings or buildings of negligible value. Other elements of the same general character suggest themselves. In such circumstances the court cannot say that the municipal authorities had not sufficient reason for the classification." 338 Pa. at 326, 327, 12 A.2d at 82. In McGillick v. City of Pittsburgh, 415 Pa. 581, 203 A.2d 480 (1964), the Supreme Court affirmed per curiam an order of the Allegheny County Court specifically upholding the city's classification, continued in the present ordinance, of commercial parking places as taxable and residential as not subject to levy. Finally, on this point, lacking better expression of our own devising, we quote from Commonwealth v. Lafferty, 426 Pa. 541, 550, 233 A.2d 256, 261 (1967), where the classification upheld was that of taxable nonpublic utilities as distinguished from excluded public utilities. Mr. Justice Eagen there wrote: "Further, it is in the context of the whole Sales and Use Tax statute that we must view the exclusion. Since this statute is one designed to raise revenue, the state need not justify any distinction drawn between the taxed and the non-taxed 'so long as some other reasonable basis for treating the various classes differently exists. Where such distinction exists, the wisdom of the legislative policy

[ 6 Pa. Commw. Page 438]

    of taxing one class and not another is not a matter for the courts.' Commonwealth v. Life Assurance Co. of Pa., 419 Pa. 370, 377 n.11, 214 A.2d 209, 215 n.11 (1965). As stated in Commonwealth v. Life Assurance Co. of Pa., Id. at 376-377, 214 A.2d at 214: 'By necessity a wide discretion must be conceded to the Legislature in the classification of various businesses or occupations for purposes of taxation. . . .'" As further stated in Commonwealth v. Life Assurance Co. of Pa., 419 Pa. 370, 376, 379, 214 A.2d 209, 214, 215 (1965):

"The only constitutional limitation placed upon the power of the Legislature to distinguish between various entities for purposes of taxation is that their basis for doing so be reasonable. . . .

"And where such distinction rests upon differences recognized and acted upon by the business world, it is not within the province of the courts to intrude. . . . So long as the classification is neither capricious nor arbitrary, there is no denial of the equal protection of the law. . . ." The distinction here between parking lots and other businesses and between commercial and residential parking lots, as has been held in Philadelphia v. Samuels, supra, and McGillick v. City of Pittsburgh, supra, satisfy constitutional requirements.

Within the general ambit of equal protection and uniformity, the appellants make two other arguments, one based on what this tax might be named and the other on the asserted inaccuracy of a statement in the preamble of the ordinance concerning the characteristics of the appellants' enterprises. As to the first, appellant Meyers Brothers contends that because the city at some time in the course of the litigation called the tax a license tax, it is such and under settled principles may not exceed the cost of regulation. As clearly declared in Philadelphia v. Samuels, supra, the measure

[ 6 Pa. Commw. Page 439]

    in question is an excise tax imposed upon the transaction of parking a motor vehicle. It is a revenue measure by terms of the ordinance and by the Act of Assembly by which it was authorized. In Philadelphia Tax Review Board v. Smith, Kline and French Laboratories, 437 Pa. 197, 262 A.2d 135 (1970), the Supreme Court held that a tax imposed by the City specifically denominated a "License Tax" was nevertheless a revenue measure and not preempted by a state license and regulatory measure.*fn2

The appellants' argument that the preamble of the ordinance here somehow supports their view that the classification of their enterprises for the tax is unreasonable is difficult to follow because it stems from a misreading of the ordinance. The preamble in question states: "Nonresidential parking places, by reason of the frequency of their use at various hours of the day, their location, their relationship to traffic congestion and other characteristics, present problems requiring municipal services and affect public interest, differently from parking places accessory to the use and occupancy of residences. . . ." The appellants say that this seeks to justify the classification of parking lots on the basis that such lots cause congestion and therefore require municipal services, and that because such lots

[ 6 Pa. Commw. Page 440]

    in fact alleviate congestion and reduce municipal concern for traffic congestion, the asserted basis for classification disappears. But the quoted portion of the ordinance, as we read it, does not seek to justify the distinction between parking lots and other businesses but between nonresidential and residential lots. Nor does it suggest that parking lots cause congestion; rather, it says that their activities are related to congestion and require municipal services.

We have attempted here to treat all of appellants' arguments based upon alleged want of equal protection and lack of uniformity. We have carefully considered their thorough briefs and have concluded that the ordinance satisfies these constitutional requirements.

The appellants further vigorously contend that rate of tax here imposed is so high as to result in the taking of their property without due process of law. A tax, they say, which is confiscatory is unconstitutional. Despite the city's argument and the finding of the court below to the contrary, this tax is indeed imposed at an unreasonable rate. The undisputed evidence on this record is as follows:

1. There are about 24,300 parking spaces in the City of Pittsburgh. Of this number 6100 are served by a public parking authority, subjected to this tax, but exempt from other taxes including those on real estate. Of the balance of about 18,000 spaces, the plaintiffs here owed or operated about 17,000.

2. Based upon six months' operations and a sound statistical projection for the balance of the year 1970 with expenses computed at 1969 rates, that portion of the industry represented by appellants, would, during the year 1970, earn gross revenues of over $8,000,000, pay $1,600,000 on account of this tax and sustain a loss of $270,000. Of the fourteen appellant enterprises nine would sustain losses and of the others the one

[ 6 Pa. Commw. Page 441]

    showing the largest profit would earn an amount equal to only 2.9% of its gross revenues.*fn3

3. The appellants are unable to pass the tax on to their customers, not only because customers cannot and will not pay higher rates but also because the appellants are in competition with a public authority which, exempt from other taxes, can charge less.

4. The rate of tax was increased from fifteen per centum effective in 1969 to twenty per centum, although in 1969 the appellants lost $26,000 on gross revenues of about $7,700,000 on which they paid a tax under this ordinance of more than $1,400,000.

The problem, however, is that there is no constitutional prohibition of taxation at unreasonable or even confiscatory rates. The appellants' argument upon this point rests primarily upon the following statement by Mr. Justice Linn in Philadelphia v. Samuels, 338 Pa. at 327, 12 A.2d at 82: "Little need be said on the point that the ordinance is confiscatory. The state expressly authorized the city to levy taxes for general revenue purposes and the ordinance so provides. There is nothing in the record to show that the rate imposed by the ordinance is so high as to result in taking property without due process. The probability is that, in effect, the tax will be passed on to patrons, but if it is not, and if an occasional operator cannot afford to continue in business and pay the tax, it may be unfortunate but will not render the ordinance invalid." At most this statement supplies no more than an implication that an ordinance which makes it impossible for more than an occasional operator to remain in business might be invalid.

[ 6 Pa. Commw. Page 442]

On the other hand, language used by the Supreme Court in Philadelphia v. Eglin's Garages, Inc., 342 Pa. 142, 144, 19 A.2d 845 (1941), one year later indicates second thoughts concerning the quoted portions of the Samuels case: "Proof of the averments of loss . . . would not establish confiscation even if relevant. . . . In my view, therefore, the averments of loss referred to are not sufficient to sustain the charge of confiscation assumed to be relevant." (Emphasis supplied.) It is apparent to us that our Supreme Court had in the interval considered the question in the light of very ...

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