No. 35 March Term, 1978, Appeal from the Order of the Commonwealth Court of Pennsylvania at No. 1245 C.D. 1976, Reversing the Final Decree of the Court of Common Pleas of Allegheny County, Pennsylvania, Civil Division, at No. 456 January Term, 1970, In Equity, And Remanding To That Court For Further Proceedings.
Frank L. Seamans, Dale E. Williams, Samantha Francis Flynn, Dennis J. Lewis, Eckert, Seamans, Cherin & Mellott, Pittsburgh, for appellants.
Mead J. Mulvihill, Jr., City Sol., Grace S. Harris, Exec. Asst. City Sol., Pittsburgh, for appellees.
Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Larsen, JJ. Manderino, J., filed a dissenting opinion. Larsen, J., filed a dissenting opinion in which Manderino, J., joined. Mr. Justice O'Brien and Former Justice Pomeroy did not participate in the decision of this case.
The Local Tax Enabling Act authorizes the City of Pittsburgh to "levy, assess and collect" taxes upon "persons, transactions, occupations, privileges, subjects and personal property,"*fn1 but denies the City the authority to tax "manufacturing."*fn2 Pursuant to the Act, the City imposes a "Business Privilege Tax." Appellants, radio and television broadcasters, brought an action in equity, alleging they are "manufacturers" not subject to the City's tax.*fn3 Appellants sought to enjoin the City from collecting its Business Privilege Tax upon their revenues. The chancellor concluded that appellants are "manufacturers" and enjoined collection of the tax. On the City's appeal, the Commonwealth Court reversed. We granted allowance of appeal and now affirm.*fn4
Throughout these proceedings, appellants have maintained that they "derive their revenues from those who seek to convey commercial messages to the public in the same
fashion that the newspapers derived their advertising receipts from those who buy space in their newspapers."*fn5 Our task is to determine whether the activity which produces appellants' revenues is "manufacturing" for purposes of the Local Tax Enabling Act. The Legislature provides no definition of "manufacturing" for purposes of the Act, and this Court has not yet considered the term as used in the Act. But "[t]his definitional vacuum has been filled by a judicial definition of the term which has emerged from a long line of cases extending back over a hundred years' time." Commonwealth v. Deitch Co., 449 Pa. 88, 92, 295 A.2d 834, 837 (1972) (discussing "Capital Stock Tax" Act*fn6). Deitch summarizes the "judicial definition" that has "emerged" from our "long line of cases:"
"'The meaning of "manufacturing" has been restated by this Court in Philadelphia School District v. Parent Metal Page 529} Products, Inc., 402 Pa. 361, 364, 167 A.2d 257, 258-59 (1961): "'Manufacturing' as used in a legislative enactment is given its ordinary and general meaning.*fn7 It consists in the application of labor or skill to material whereby the original article is changed into a new, different and useful article: Commonwealth v. Weiland Packing Company, 292 Pa. 447, 449, 141 A. 148 (1928); Pittsburgh v. Electric Welding Company, 394 Pa. 60, 145 A.2d 528 (1958). Whether or not an article is a manufactured product depends upon whether or not it has gone through a substantial transformation in form, qualities and adaptability in use from the original material, so that a new article or creation has emerged: General Foods Corp. v. Pittsburgh, 383 Pa. 244, 118 A.2d 572 (1955). If there is merely a superficial change in the ...