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TOWNSHIPS SPRINGDALE AND WILKINS v. ROBERT P. KANE (12/04/73)

decided: December 4, 1973.

THE TOWNSHIPS OF SPRINGDALE AND WILKINS, PLAINTIFFS,
v.
ROBERT P. KANE, SECRETARY OF REVENUE, ROBERT P. CASEY, AUDITOR GENERAL, ISRAEL PACKEL, ATTORNEY GENERAL, AND GRACE M. SLOAN, STATE TREASURER, OF THE COMMONWEALTH OF PENNSYLVANIA, DEFENDANTS. THE SCHOOL DISTRICTS OF DEER LAKES AND ALLEGHENY VALLEY, THE TOWNSHIPS OF SPRINGDALE, WILKINS AND HARMAR, THE BOROUGH OF CHESWICK, ALL POLITICAL SUBDIVISIONS OF THE COMMONWEALTH OF PENNSYLVANIA, PLAINTIFFS, V. ROBERT P. KANE, SECRETARY OF REVENUE, AND ROBERT P. CASEY, AUDITOR GENERAL, AND ISRAEL PACKEL, ATTORNEY GENERAL, AND GRACE M. SLOAN, STATE TREASURER, OF THE COMMONWEALTH OF PENNSYLVANIA, DEFENDANTS



Original jurisdiction in cases of The Townships of Springdale and Wilkins v. Robert P. Kane, Secretary of Revenue, Robert P. Casey, Auditor General, Israel Packel, Attorney General, and Grace M. Sloan, State Treasurer, of the Commonwealth of Pennsylvania; and The School Districts of Deer Lakes and Allegheny Valley, The Townships of Springdale, Wilkins and Harmar, The Borough of Cheswick, all political subdivisions of the Commonwealth of Pennsylvania v. Robert P. Kane, Secretary of Revenue and Robert P. Casey, Auditor General, and Israel Packel, Attorney General, and Grace M. Sloan, State Treasurer, of the Commonwealth of Pennsylvania.

COUNSEL

Franklyn E. Conflenti, with him David R. Cashman, Cauley, Birsic & Conflenti, Charles F. Hodel, Jr., and Smith, Hodel & Means, for plaintiffs.

William H. Smith, Deputy Auditor General and Chief Counsel, with him Craig R. Burgraff, Deputy Counsel, for defendant, Casey.

Vincent X. Yakowicz, Special Assistant Attorney General, with him Gerald Gornish, Deputy Attorney General, Melven R. Shuster, Deputy Attorney General, and Israel Packel, Attorney General, for remaining defendants.

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

Author: Kramer

[ 11 Pa. Commw. Page 257]

Case Docketed No. 341 C.D. 1973 This matter comes within the original jurisdiction of this Court. The action was commenced by the filing of a Complaint in Equity by Springdale Township and Wilkins Township (Townships), both of Allegheny County, on behalf of themselves and of all local taxing authorities of the Commonwealth, similarly situated, against the Secretary of Revenue, the Auditor General, the Attorney General, and the State Treasurer of the Commonwealth of Pennsylvania. The complaint, after noting the provisions of Article VIII, Section 4 of the Pennsylvania Constitution of 1968 pertaining to the taxation of the real property of public utilities, and the distribution of real estate tax equivalents to local taxing authorities, alleges that the General Assembly of the Commonwealth on March 10, 1970, enacted the Public Utility Realty Tax Act (PURTA), the Act of March 10, 1970, P.L. 168, 72 P.S. § 3271, et seq. as compliance with said constitutional provisions. The Townships then alleged that the defendants, through their agents, servants, agencies and employes, collected approximately $29,300,000 from the imposition of the PURTA tax, but that in violation of the constitutional mandate, and based upon a claim that Section 7(b) (72 P.S. § 3277(b)) of PURTA was unconstitutional as written, the defendants had failed to pay to the local taxing authorities any portion of the $29,300,000 representing the imposition of the PURTA tax for the period March 10, 1970 through December 31, 1970. The Townships also allege that the said $29,300,000 was still on deposit with the Commonwealth. The complainants also note that the PURTA tax monies collected for the years 1971 and 1972 were partially disbursed to the local taxing authorities.

[ 11 Pa. Commw. Page 258]

The Townships, in their prayer, request this Court to order the defendants to distribute the monies collected under PURTA, in accordance with the provisions of PURTA, for the calendar year 1970 to all local taxing authorities in the Commonwealth, that counsel fees be awarded, and an accounting be made by the defendants.

The Secretary of Revenue, the Attorney General, and the State Treasurer filed joint preliminary objections in the nature of a demurrer stating that the payment due the local taxing authorities for the year 1970 had been paid in 1971, that PURTA made no provision for payment in 1970, and that the Townships' complaint was barred because of sovereign immunity. They also raised the objection that this Court did not have jurisdiction over the recovery of funds collected as taxes, and, lastly, charged the Townships with laches inasmuch as the complaint had not been filed for a period in excess of two years after a claim could have been made. The Auditor General filed separate preliminary objections in which he demurred for the reason that there are no specific allegations charging that he has any power with reference to the PURTA tax. The Townships filed preliminary objections to the preliminary objections of the Auditor General on the basis that the Auditor General had not filed his preliminary objections until some 33 days after service of the complaint. The reason for the Auditor General's delay was that he had filed a motion to drop the Auditor General as a party defendant, which motion had been denied by an order of this Court some 27 days after the service of the complaint upon the Auditor General. Under the provisions of Pennsylvania Rules of Civil Procedure Nos. 1026 and 126 whereby the Court is given the discretion to disregard a defective procedure which does not affect the substantial rights of the parties, we will overrule the preliminary objections of the Townships

[ 11 Pa. Commw. Page 259]

    to the preliminary objections of the Auditor General. See Paulish v. Bakaitis, 442 Pa. 434, 275 A.2d 318 (1971); Fisher v. Hill, 368 Pa. 53, 81 A.2d 860 (1951), and McKay v. Beatty, 348 Pa. 286, 35 A.2d 264 (1944).

Preliminary Objections of the Auditor General

The only basis upon which the Auditor General has filed his preliminary objections is that there is no statutory or constitutional duty imposed upon the Auditor General with regard to the distribution of the PURTA tax dollars. Article VIII, Section 10 of the Pennsylvania Constitution of 1968 states: "The financial affairs of any entity funded or financially aided by the Commonwealth, and all departments, boards, commissions, agencies, instrumentalities, authorities and institutions of the Commonwealth, shall be subject to audits made in accordance with generally accepted auditing standards." Furthermore, Section 402 of The Fiscal Code, Act of April 9, 1929, P.L. 343, as amended, 72 P.S. § 402, provides:

"Except as may otherwise be provided by law it shall be the duty of the Department of the Auditor General to make all audits of transactions after their occurrence, which may be necessary, in connection with the administration of the financial affairs of the government of this Commonwealth, with the exception of those of the Department of the Auditor General. It shall be the duty of the Governor to cause such audits to be made of the affairs of the Department of the Auditor General.

"At least one audit shall be made each year of the affairs of every department, board, and commission of the executive branch of the government, and all collections made by departments, boards, or commissions, and the accounts of every State institution, shall be audited quarterly." It seems clear that the Auditor General is empowered to review, audit and account for the monies received by the Commonwealth and to assure all citizens

[ 11 Pa. Commw. Page 260]

    of the Commonwealth that the monies received are distributed in accordance with the law. At this point in this proceeding, we are not determining whether or not the Commonwealth received the PURTA money or whether it properly distributed those monies. The case before us is on preliminary objections in the nature of a demurrer; therefore, we must accept as true all of the properly pleaded allegations of fact. See Balsbaugh v. Rowland, 447 Pa. 423, 290 A.2d 85 (1972). The allegation is that the Commonwealth received $29,300,000 of PURTA money which the Legislature intended to be distributed each year, as collected, to local taxing authorities and that this was not done. In view of the fact that the Auditor General obviously has responsibilities in connection with the constitutional mandate and the legislative scheme of distributing PURTA tax dollars, the Auditor General may have a duty, and therefore, his preliminary objections must be overruled.

Preliminary Objections of the Attorney General, Secretary of Revenue and State Treasurer

The Attorney General, representing himself and the Secretary of Revenue and State Treasurer, attempts to use his preliminary objections as an answer for he avers that the PURTA tax dollars which were collected during the year 1070 were actually paid to the local taxing authorities. We again reiterate this case is before us on preliminary objections in the nature of a demurrer, and we must accept as true all of the properly pleaded averments of fact found in the complaint. See Balsbaugh v. Rowland, supra. Thus, we must assume for the purposes of the disposition of the preliminary objections that the money was received by the Commonwealth and that it was not paid out to the ...


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