Appeal from the Order of the Court of Common Pleas of Dauphin County in case of Commonwealth of Pennsylvania v. Lawrence E. Peters, Nos. 1011, 1012, 1013 and 1014 September Term, 1973.
Michael H. Chwastiak, Assistant Attorney General, with him Herbert W. Hoffman, Assistant Attorney General, and Israel Packel, Attorney General, for appellant.
Leslie B. Handler, for appellee.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by President Judge Bowman.
[ 18 Pa. Commw. Page 449]
Before us for disposition is the Commonwealth's appeal from an order of the Court of Common Pleas of Dauphin County directing the Prothonotary of Dauphin County "to strike the liens entered to Nos. 1011, 1012, 1013 and 1014 September Term 1973 and remove any reference thereto from the indices."
Lawrence E. Peters (appellee) was the owner of a bricklaying business in Dauphin County employing an unspecified number of individuals. As such an employer, pursuant to the provisions of the Pennsylvania Unemployment Compensation Law,*fn1 appellee was subject to unemployment compensation taxes. Appellee failed to pay said taxes for portions of the years 1961 and 1962, and consequently the Commonwealth made appropriate tax assessments and entered four tax liens for the quarters in question against appellee in Dauphin County in 1962. The amount due and owing the Commonwealth was not paid, and thus in 1968 and again in 1973, the liens were revived.
On September 11, 1969, appellee filed a voluntary petition in bankruptcy and on October 30, 1969, appellee was duly "discharged from all debts and claims which by the Act of Congress relating to Bankruptcy, are made provable against his estate except such debts as set by statute, excepted from the operation of a discharge in bankruptcy." Despite this discharge, the Commonwealth, in 1973, revived the four tax liens on the theory that they
[ 18 Pa. Commw. Page 450]
were not discharged under the language of section 17(a)(1) of the Bankruptcy Act, 11 U.S.C. § 35(a)(1).
Thereafter, on February 5, 1974, appellee filed a petition with the lower court for a rule to show cause why the Commonwealth should not be compelled to satisfy its four tax liens in light of appellee's discharge in bankruptcy. After hearing, oral argument and briefing before the lower court, appellee's rule was made absolute and the liens directed to be marked as satisfied.
The principle issue raised in this appeal is the interpretation of the 1966 amendment to section 17(a)(1) of the Bankruptcy Act, 11 U.S.C. § 35(a)(1), wherein it provides in pertinent part:
"A discharge in bankruptcy shall release a bankrupt from all of his provable debts . . . except such as (1) are taxes which became legally due and owing by the bankrupt to the United States or to any State or any subdivision thereof within three years preceding bankruptcy: . . . And provided further, That a discharge in ...