Appeal from order of Commonwealth Court, No. 41 T.D. 1970, in case of Commonwealth of Pennsylvania v. Safe Harbor Water Power Corporation.
Robert R. Batt, with him Brian T. Keim, and Ballard, Spahr, Andrews & Ingersoll, for appellant.
George W. Keitel, Deputy Attorney General, for Commonwealth, appellee.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Roberts. Mr. Justice Nix concurs in the result. Dissenting Opinion by Mr. Justice Eagen. Mr. Chief Justice Jones joins in this dissenting opinion.
Safe Harbor Water Power Corporation appeals from a unanimous order of the Commonwealth Court that determined Safe Harbor's 1957 corporate net income tax liability to be $105,141.37.*fn1 The court found all of Safe Harbor's 1957 gross receipts to be assignable to Pennsylvania and properly taxable. Safe Harbor Water Power Corp. v. Commonwealth, 9 Pa. Commonwealth Ct. 312, 305 A.2d 394 (1973). We agree and affirm.*fn2
The case was tried non-jury before the Commonwealth Court en banc pursuant to a stipulation of facts.*fn3 Relevant portions of the record stipulation disclose:
"[Safe Harbor], a Pennsylvania corporation, was formed in 1930 as the resulting corporation in the merger and consolidation of Safe Harbor Water Power Corporation and Chanceford Water Power Corporation. . . .
"The formation of [Safe Harbor] as aforesaid was caused by Consolidated Gas Electric Light and Power Company of Baltimore (now Baltimore Gas and Electric Company and hereinafter referred to as 'the Baltimore company') and Pennsylvania Water and Power Company (predecessor to Pennsylvania Power and Light Company, both predecessor and successor being referred to hereinafter as 'the Pennsylvania company') . . . .
"The Baltimore company and the Pennsylvania company originally constituted the so-called 'Aldred System', i.e., the electric power system controlled by J.E. Aldred, controlling partner of the New York investment banking firm of Aldred & Company. In 1927, under the direction of Mr. Aldred as Chairman of the Board of the Baltimore and Pennsylvania companies, the two companies were more closely integrated through the execution of a long-term contract under which the Baltimore company became entitled to the entire hydroelectric output of the Pennsylvania company.
"[Safe Harbor] was formed as an extension of the Aldred System. On June 27, 1931, during the construction of its generating facilities on the Susquehanna River at Safe Harbor, Pennsylvania, [Safe Harbor] entered into an agreement with the Baltimore company and the Pennsylvania company, dated June 1, 1931 and providing for the sale of two-thirds of its output to the Baltimore company and one-third to the Pennsylvania company. This agreement . . . was by its terms to remain in force until April 22, 1980. . . .
"The rate of annual payment called for under Article V of the 1931 Agreement, specified for 1938 and subsequent years to be such as to yield to [Safe Harbor]
a return of seven percent on its rate base, was reduced to five percent in 1946 pursuant to order of the Federal Power Commission.
"Throughout 1931 and for many years thereafter, (in the case of [Safe Harbor] until August, 1955), all three companies maintained their principal offices in the Lexington Building in Baltimore, Maryland. During the month of June, 1931, [Safe Harbor] occupied twenty-four rooms in the said building under lease from the Baltimore company as ...