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decided: May 28, 1982.


No. 81-1-66, No. 81-1-67, Appeal from the Order of the Commonwealth Court filed April 30, 1981, at No. 1313 C.D. 1979, Affirming the Order of the Court of Common Pleas of Allegheny County, Civil Division, at Nos. S.A. 398-1979 and S.A. 421-1979.


John A. Robb, Jr., Robb, Leonard & Mulvihill, Pittsburgh, for appellants.

Richard H. Martin, Joan P. Feldman, Baskin & Sears, Pittsburgh, for appellees in No. 66.

John H. Bingler, Jr., Jeffrey S. Blum, Glenn E. Bost, II, Thorp, Reed & Armstrong, Pittsburgh, for appellees in No. 67.

Roberts, Nix, Larsen, McDermott and Hutchinson, JJ. Roberts and McDermott, JJ., concurred in the result. Flaherty, J., did not participate in the consideration or decision of this case.

Author: Nix

[ 498 Pa. Page 291]


The Moon Area School District (District) imposed a local tax on paid parking in the district. In this consolidated appeal,*fn1 we are asked to consider whether 1) appellees have standing to prosecute the actions, 2) the tax violates the Commerce and Due Process Clauses of the United States Constitution and 3) such a tax is authorized under the Local Tax Enabling Act, Act No. 511 of 1965, as amended, 53 P.S. § 6901 et seq. (the Act).


On March 26, 1979 Moon Area School District pursuant to the Act enacted Resolution 79-2 which sets out a parking tax upon parking in all non-residential parking facilities located within the district for the purpose of raising revenues for the operation of the schools in the district. The resolution requires patrons to pay a tax at the rate of 15% of the consideration for each parking transaction. Operators of non-residential parking places are required to obtain a registration certificate at an annual cost of Ten ($10.00) Dollars, to collect the parking tax from patrons, keep chronological records of all transactions, and file monthly returns with the tax collector. Any operator's failure to comply with certain conditions subjects the operator to a monetary penalty that may equal 100% of the proper tax as well as penalty and interest. Criminal sanctions not to exceed $500.00, or upon default, imprisonment of less than thirty days are also provided.*fn2

[ 498 Pa. Page 294]

There are presently six non-residential parking operations which provide an approximate aggregate of six thousand one hundred fifty (6,150) parking spaces. A substantial number of these spaces are used by persons utilizing the Greater Pittsburgh International Airport as all of the parking lots are closely situate in the locale of the Airport.*fn3 Air traffic at the airport is both interstate and intrastate.

Challenges to the tax are residents of the school district, non-residents of the district, two airlines that service the airport and have an interest in the parking lot at the airport, operators of several of the lots, and the owner/lessors of the realty on which the parking concessions operate. These challengers filed appeals from the tax levy on April 6, 1979. On the same day, by order of then Judge John Flaherty, the appeals acted as a supersedeas until hearing which was held May 7, 1979.*fn4 The lower court declared the tax unconstitutional. The Commonwealth Court affirmed the lower court.

[ 498 Pa. Page 295]

The District petitioned for allowance of appeal from the decision of the Commonwealth Court in both cases to this Court. The petitions were granted and the appeals consolidated.

Appellant raised the questions of appellees standing to attack the validity of the tax through preliminary objections which were denied below. The essence of appellant's standing argument on appeal is that appellees did not allege specifically that they were "taxpayers" and "aggrieved parties," the standing requirements of the Act,*fn5 and that being subjected to the tax if appellees choose to park in one of the non-residential parking facilities is insufficient as a matter of law to establish standing. We find the arguments unpersuasive.

The argument that appellees have not specifically alleged they are taxpayers and aggrieved is anachronistic. Hypertechnicality and formalism in pleading does not promote a prompt determination of the validity of the taxing resolution, as envisioned by the legislature in enacting Section 6 of the Act.*fn6 Further, such formalism is "a reversion to seventeenth century pleading"*fn7 contra the modern trend.

[ 498 Pa. Page 296]

    to be filed by prescribing an effective date at least thirty (30) days from the time of adoption of the taxing ordinance or resolution. If appellants were to succeed in their contention of prematurity, appeals not premature would be too late and no patron would be able to challenge the tax. All patrons able to file timely appeals from the tax are potential patrons. To hold that such persons do not have standing, which is absurd, contravenes the presumption "that the General Assembly does not intend a result that is absurd . . . or unreasonable." Statutory Construction Act, Act of December 6, 1972, P.L. 1339, No. 290, 1 Pa.C.S.A. § 1922.

So, too, the tax-collection liability of the operators confers standing upon appellee/operators. See, e.g., National Geographic Society v. California Board of Equalization, 430 U.S. 551, 97 S.Ct. 1386, 51 L.Ed.2d 631 (1977) (sole challenger of tax had only use-tax-collection liability and standing was assumed); Wm. Penn Park., Inc. v. City of Pitts., supra, (plurality opinion, no dissents) (tax collection liability of parking operators sufficient for standing). The owner/lessors are persons subjected to the taxing resolution as are the resident and non-resident appellees, and thus, have standing.


Appellees contend that the tax violates the Commerce Clause*fn9 of the Constitution of the United States. It is argued that the tax imposes an impermissible burden upon interstate commerce.

The threshold question is whether the courts need review this local state tax under the "negative implications" of the Commerce Clause. Judicial review of such taxes under the Commerce Clause is intended

[ 498 Pa. Page 298]

. . . to ensure that States do not disrupt or burden interstate commerce when Congress' power remains unexercised: it protects the free flow of commerce, and thereby safeguards Congress' latent power from encroachment by the several States.

Merrion v. Jicarilla Apache Tribe, [455] U.S. [130, 154, 102 S.Ct. 894, 910] 71 L.Ed.2d 21, 40 (Slip opinion, filed January 25, 1982).

And "[c]courts are final arbiters under the Commerce Clause only when Congress has not acted." Merrion v. Jicarilla Apache Tribe, supra, 455 U.S. at 155, 102 S.Ct. at 910, 71 L.Ed.2d at 40. See, e.g., Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 454, 99 S.Ct. 1813, 1824, 60 L.Ed.2d 336 (1979); Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 421-427, 66 S.Ct. 1142, 1150-53, 90 L.Ed. 1342 (1946).

In this case, Congress has acted affirmatively when it expressly prohibited head taxes on persons traveling in air commerce and expressly permitted "sales or use taxes on the sale of goods or services." Pub.L. 85-726, Title XI, § 1113, as added Pub.L. 93-44, § 7(a), June 18, 1973, 87 Stat. 90, 49 U.S.C.A. § 1513.*fn10

[ 498 Pa. Page 299]

If the tax here is a head tax, we need not look further for Congress has spoken. Allegheny Airlines, Inc. v. City of Philadelphia, 453 Pa. 181, 309 A.2d 157 (1973). Although appellees have argued that the tax in question here is a head tax, that position is clearly untenable. A head tax is a tax reckoned at a fixed amount for each head (person) in a designated class.*fn11 The tax here is not on the heads of "persons traveling in air commerce or on the carriage of persons traveling in air commerce." The operating incidence of the tax is the transaction of parking in non-residential parking lots (which are located at or near an airport). The tax is to be borne by the patrons of the non-residential parking operations. The measure of the tax is the consideration paid for the parking transaction. It is collected by the operator of the parking facility. It is not a tax on the right to travel and clearly Congress has not prohibited such a tax under 49 U.S.C.A. § 1513.

But the permissibility of sales or use taxes on the sale of goods or services in air commerce is not a congressional ratification of the specific tax in question here. Thus, judicial scrutiny of whether this tax violates the "negative implications" of the Commerce Clause is warranted.

We do not look to whether the tax attaches only to a "local" or intrastate activity to determine whether the tax is

[ 498 Pa. Page 300]

    immune from Commerce Clause scrutiny. See Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 350, 97 S.Ct. 2434, 2445, 53 L.Ed.2d 383 (1977); Pike v. Bruce Church, Inc., 397 U.S. 137, 141-142, 90 S.Ct. 844, 846-47, 25 L.Ed.2d 174 (1970); Nippert v. City of Richmond, 327 U.S. 416, 423-424, 66 S.Ct. 586, 589-90, 90 L.Ed. 760 (1946). In reviewing a Commerce Clause challenge to this local tax, we focus upon "the practical effect of [the] challenged tax," Commonwealth Edison Co. v. Montana, 453 U.S. 609, 101 S.Ct. 2946, 69 L.Ed.2d 884 (1981); Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 443, 100 S.Ct. 1223, 1234, 63 L.Ed.2d 510 (1980), to determine whether the tax substantially affects or is connected with interstate commerce.

Interstate commerce is not immune from state taxation.*fn12 To restate, the Supreme Court "has rejected the notion that state taxes levied on interstate commerce are per se invalid." Commonwealth Edison Co. v. Montana, supra, 453 U.S. at 615, 101 S.Ct. at 2952 citing, Washington Revenue Dept. v. Association of Wash. Stevedoring Co., 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978); and Complete Auto Transit v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977). Yet, not all state taxation of interstate commerce is valid. It will be sustained, however, if it passes scrutiny under the four part test articulated in Complete Auto Transit v. Brady, supra. That test says a state tax does not offend the Commerce Clause if it "is applied to an activity with a substantial nexus with the taxing state, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to services provided by the state." 430 U.S. at 279, 97 S.Ct. at 1079.

Appellant posits that the tax is purely local in nature because the act of parking a car occurs prior to any interstate commerce. As previously stated, the local nature of the activity does not prevent Commerce Clause scrutiny.

[ 498 Pa. Page 301]

Because of the geographical location of the parking lots, at or near the airport, the commerce of the airport would be substantially impeded without the parking operations. There is a near interlocking relationship between the airport, the airline/appellees and the largest parking lot operator -- Grant-Oliver Corporation. The record here indicates that the vast majority of patrons of the parking lots are traveling in air commerce. During 1977, 88.5 percent of the passengers flying to and from the airport flew to or from a point outside the Commonwealth of Pennsylvania. The remaining 11.5 percent of the passengers were intrastate passengers. The conclusion that the parking activity is a part of the flow of or connected with interstate commerce is inescapable.

Turning to the four-part test of Complete Auto Transit v. Brady, supra, we find no serious challenge by appellees to the first three prongs of the test. The only nexus of the activity or incidence of patrons' parking is within the District. There is no problem of apportionment or multiple taxation on the subject of the tax. Since patrons' parking at a non-residential parking lot in Moon Area School District is the legal incidence or subject of the tax, and it can occur in no other place, no other locality or state can tax the patrons' parking. The Moon Area Township's gross receipts parking tax is on the incidence of doing business measured by gross receipts, Mellon Square Garage, Inc. v. Public Parking Authority of Pittsburgh, 442 Pa. 229, 275 A.2d 654 (1941) and cannot support a claim of multiple taxation.

The claim that the tax discriminates against interstate commerce because the patrons bearing the tax are largely engaged in interstate commerce does not withstand examination. A similar argument in Heisler v. Thomas Colliery Co., 260 U.S. 245, 251-253, 43 S.Ct. 83, 84, 67 L.Ed. 237 (1922) to the effect that Pennsylvania had "a virtual monopoly of anthracite coal and that, because 80% of the coal was shipped out of state, the tax discriminated against and impermissibly burdened interstate commerce . . . [was dismissed]

[ 498 Pa. Page 302]

    as 'adventitious considerations.'" Commonwealth Edison Co. v. Montana, supra, 453 U.S. at 618, 101 S.Ct. at 2954. The tax burden in this case is borne according to the extent of use of the parking facilities and not on a distinction between patrons using interstate air commerce and patrons engaged in intrastate air commerce or local commerce.

The serious challenge to the tax is under the "fairly related" prong of the Complete Auto Transit test. It is repeatedly urged, and the lower court found, that there were no benefits afforded the patrons of the parking facilities by the District. The type of benefits found to be non-existent can be characterized as particular benefits afforded the patrons directly.*fn13 This is not the benefit or service requirement of the fourth prong of the Complete Auto Transit test. Under the fourth prong "'the measure of the tax [must be] reasonably related to the taxpayers activities or presence in the state -- from which it derives some benefit such as the substantial privilege of [the operating incidence] -- the taxpayer will realize, in proportion to the taxes it pays, [t]he only benefit to which it is constitutionally entitled . . . [:] that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes (citations omitted).'" Commonwealth Edison Co. v. Montana, supra, 453 U.S. at 628-29, 101 S.Ct. at 2960. Public education is a benefit of an organized society.

Nor is this a case such as Nippert v. City of Richmond, supra, which involved a local license and gross receipts tax to be born by interstate, itinerant drummers or salespersons whose activity of selling -- the operating incidence of the tax -- was not so regular, continuous or persistent in the taxing district as to constitute a "course of business."

The measure of the Moon Area School District tax is related to the taxpayers presence or activities in the district.

[ 498 Pa. Page 303]

The tax is assessed under a formula which relates the tax liability to the value of the patrons' parking within the district. Therefore, under Commonwealth Edison Co. v. Montana, supra, the fourth prong of the Complete Auto Transit test is met. We are satisfied that the Moon Area School District tax comports with the four requirements of the Complete Auto Transit test. We now turn to the Due Process Clause challenge to the parking tax.


Appellees vigorously argue again, as a corollary to the Commerce Clause argument, that the District provides no "benefits" in exchange for the tax, and as such violates the Due Process Clause of the Constitution of the United States. U.S.Const. amend. XIV, § 1. A state's taxing power is subject to the constitutional restraints of the Fourteenth Amendment to the Constitution of the United States. And the test for determining whether property has been taken without due process of law is:

Wisconsin v. J. C. Penney, 311 U.S. 435, 444, 61 S.Ct. 246, 249, 85 L.Ed. 267 (1940).*fn14

Three years before Wisconsin v. J. C. Penney, supra, in Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 522, 57 S.Ct. 868, 878, 81 L.Ed. 1245 (1937) where infringement of the Due Process and Equal Protection Clauses of the Fourteenth Amendment by the Unemployment Compensation Act of Alabama was at issue the Supreme Court made quite clear that:

[ 498 Pa. Page 304]

"[t]he only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes. 301 U.S. at 522, 57 S.Ct. at 878*fn15

In this case, the lower court and the Commonwealth Court found that there was no benefit afforded appellees. We do not agree. The question in the framework of this case is almost frivolous. The district provides public education for the children residing in the district. It borders on the trite but we note again that public education is an advantage of a civilized society. A corporation cannot object to paying school taxes. Thomas v. Gay, 169 U.S. 264, 280, 18 S.Ct. 340, 346, 42 L.Ed. 740 (1897). A taxpayer may not successfully object, on the ground of the "benefit" theory, to taxation for a general public use which includes taxes for schools. Kelly v. City of Pittsburgh, 104 U.S. 78, 26 L.Ed. 658 (1881). Appellees' argument is basically what this Court rejected in Kelly v. City of Pittsburgh, 85 Pa. 170, 179 (1877) when it stated:

Now it may be true that the plaintiff is not personally benefited by either the educational or poor department of the city; but neither is any one not having children to educate, and not being himself a pauper. Yet, for such reason we are hardly prepared to stop the hand of the collector of school and poor rates. He may not be personally benefited by the fire and police department; but the general municipality is largely benefited thereby, and his welfare is found in the prosperity of that municipality. [Emphasis added.]

[ 498 Pa. Page 305]

The activity of parking within the school district in order to have easy access to the airport, as well as the availability to the public of the school district's recreational facilities are more than sufficient personal benefits which concretize the necessary general benefit of participating in an orderly and civilized society.

We see no reason to depart from these sound principles and thus find the tax does not offend the Due Process Clause of the Fourteenth Amendment to the United States Constitution.


Appellees argue, and the lower court agreed, that the taxed transaction at the valet parking lots is a "retail sale" of a valet parking service which involves the transfer of possession of tangible personal property. It is urged that the amount of the tax exceeds the limit set by Section 8(4) of the Act, 53 P.S. § 6908(4).*fn16 Appellees rely upon Taylor v. Philadelphia Parking Authority, 398 Pa. 9, 156 A.2d 525 (1959) and Mellon Square Garage, Inc. v. Public Parking Authority of Pittsburgh, 442 Pa. 229, 275 A.2d 654 (1971) as authority for their position. Their reliance is misplaced.

In attempting to apply Section 8(4) of the Act to the valet parking transactions primary emphasis has been given improperly by appellees to the transference of possession of the vehicles. In order to show transference of possession or a bailment, Taylor v. Philadelphia Parking Authority, supra, is cited. That case held that when the owner of an automobile parked on a commercial parking lot retains control of that vehicle by keeping the keys to it, the nature of the arrangement between the proprietor of the lot and the car owner is one of a lease of parking privileges. The nature of the legal

[ 498 Pa. Page 306]

    relationship was defined for the purpose of determining who assumes the risk of loss when a theft of contents of the parked automobile occurs. Mr. Justice McBride, speaking for the Court, commented, "The characterization of the relationship as a bailment or a lease . . . is based solely on whether the alleged bailor delivered the custody and control of the item to the bailee." 398 Pa. at 12, 156 A.2d at 527. But the categorization of the transaction as a bailment, and thus a transference of possession of property, does not aid in analysis here. The emphasis in Section 8(4) is upon "retail sale" primarily, and upon the transfer of title or possession of tangible personal property secondarily. The "retail sale" component of Section 8(4) is constricted by the modifying phrase "involving the transfer of title or possession of tangible personal property," not replaced by it. And since in bailment transactions the transference of possession is temporary, no ownership interest is transferred and the bailee's possession is on behalf of the bailor,*fn17 a bailment cannot meet this Court's essential element inherent in the definition of a sales tax: a tax imposed upon a transaction whereby property is acquired. Mellon Sq. G. Inc. v. Pub. P. Auth. of Pitts., supra; Blauner's, Inc. v. Philadelphia, 330 Pa. 340, 198 A. 889, 892 (1938). Neither in our definition of a sales tax nor under Section 8(4) was the acquisition or possession of property intended to be a temporary one for the benefit of another. Further examination of the secondary consideration of transfer of possession is unnecessary. We hold there has been no sale when a valet parking transaction occurs.

[ 498 Pa. Page 307]

Seeking further support of their proposition that the transaction is a sale, appellees cite dicta in Mellon Sq. G. Inc. Page 307} v. Public P. Auth. of Pitts., supra.*fn18 The gratuitous statement in Mellon is not operative in this analysis and the advancement of it is a profound disservice to the fundamental soundness of the holding in that case.

When the patrons of valet parking pay the parking operators, they pay, not for the acquisition of property, but for the use of the parking lot and the valet service. Possession of the vehicle is temporarily transferred to the operator of the lot for the patrons benefit and is returned. This is not a "retail sale." The court below was in error in concluding that the tax upon valet parking transactions was controlled by Section 8(4) of the Act and the rate of the tax on valet parking need not be reduced to 2%.

A close reading of the record reveals that the agreement entered into by the District regarding no requirement of the posting of a bond by appellees pending appeal was operative for only thirty (30) days after the trial court's decision on the merits. Therefore, appellant is not prevented from raising the issue. However, the requirements of Section 6 of the Act, 53 P.S. § 6906 provide for the posting of security in the amount of five hundred dollars ($500.00). A bond in this amount was posted by appellees. Additional security was not necessary as the tax moneys have been collected from the patrons and placed in escrow by the parking lot operators. (R. 449a).

Accordingly, the order of the Commonwealth Court affirming the order of the Court of Common Pleas of Allegheny County is reversed and the objections to the tax are dismissed.

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