Nos. 2378 C.D. 1984; 2422 C.D. 1984. Appeal from the order entered July 17, 1984, in the Court of Common Pleas of Allegheny county, Civil Division at No. GD 81-5649, Nos. 5 W.D. Appeal Docket 1985; 6 W.D. Appeal Docket 1985.
Mark J. Murphy, Robert M. Brown, Eckert, Seamans, Cherin & Mellott, Pittsburgh, for the Public Auditorium of Pittsburgh and Allegheny County.
James J. Dodaro, Sol., Allan J. Opsitnick, Asst. Sol., Pittsburgh, for Allegheny County.
Robert V. Campedel, Clairton, for Al Monzo, etc. and Gateway Motels, Inc.
Nix, C.j., and Larsen, McDermott, Hutchinson, Zappala and Papadakos, JJ. Flaherty, J., did not participate in the decision or consideration of this case. Nix, C.j., concurs in the result.
This is the consolidated appeal of Allegheny County and The Public Auditorium Authority of Pittsburgh and Allegheny County (Appellants) from the Order of the Court of Common Pleas of Allegheny County entered on July 17, 1984, by the Honorable Richard G. Zeleznik, finding that the Allegheny County one percent (1%) Hotel Room Rental Tax Ordinance and its underlying enabling act is unconstitutional under the United States and Pennsylvania Constitutions; dismissing the complaint of Allegheny County against Al Monzo and rendering findings in favor of Gateway Motels, Inc. (Appellee).
On December 27, 1977, Allegheny County, pursuant to the Hotel Room Rental Tax Statute,*fn1 enacted the Hotel
Room Rental Tax Ordinance of Allegheny County*fn2 effective in January, 1978, in accordance with its authority under the
statute. The ordinance imposed a one percent (1%) room rental tax on the consideration received by each operator of a hotel within the county from each transaction of renting rooms to transients. Subsequently, the County Treasurer promulgated Regulations 101-110 to implement collection and enforcement procedures.
Appellee, Gateway Motel, Inc., owns and operates the Howard Johnson's Motor Lodge located in the Borough of Monroeville, near the Westmoreland County dividing line. As of the effective date of the Ordinance in January, 1978, through May, 1980, Gateway complied with the Ordinance by collecting the one percent (1%) tax from its patrons, filing the necessary tax returns and remitting the tax proceeds to the Treasurer of Allegheny County. However, in June, 1980, Gateway, at the direction of a principal shareholder, Al Monzo, discontinued paying over the tax proceeds and instead began to deposit these funds into an escrow account at a local savings and loan association. Gateway did, however, continue to file the hotel tax returns with the County Treasurer's office.
In early 1981, Appellant, Allegheny County, filed an action in assumpsit in the Court of Common Pleas of Allegheny County against Al Monzo, trading and doing business as Howard Johnson's Motor Lodge, to enforce collection of the tax proceeds collected but not paid over to the County Treasurer. The stipulated amount in controversy
as of the date of trial was $59,766.05. Subsequently, Allegheny County filed an amended complaint to include Gateway as a defendant. Appellees defended the action by challenging the constitutionality of the statute and ordinance as violative of the due process, uniformity and equal protection provisions of both the Pennsylvania and the United States Constitutions. In its opinion of October 28, 1983, the trial court dismissed the action as to Al Monzo, as an individual, and declared the statute and ordinance invalid under Article VIII, Section 1, of the Pennsylvania Constitution and the Fourteenth Amendment to the United States Constitution.
On January 25, 1984, Appellant, Public Auditorium Authority of Pittsburgh and Allegheny County, filed a Petition for Leave to Intervene and was granted leave to intervene as a plaintiff on February 7, 1984. Arguments on Exceptions to the Findings, filed by the County and expressly adopted by the Authority, were heard by the trial court. On July 17, 1984, the Exceptions were dismissed and a final order was issued entering judgment for Gateway. Timely notices of appeal were filed by both the County and the Authority with the Commonwealth Court. On October 2, 1984, the Commonwealth Court entered an order consolidating the appeals and, on November 16, 1984, entered an order transferring the appeal to this Court.*fn3
In this consolidated appeal, we are asked to consider: (1) whether Appellee has standing to challenge the constitutionality of the statute and ordinance; and (2) whether Appellee has met its burden of proof that the tax violates the Uniformity Clause of the Pennsylvania Constitution and the Due Process and Equal Protection Clauses of the United States Constitution.
The essence of Appellants' standing argument is that Gateway is not the taxpayer under the statute and ordinance, but merely the collector, and that Appellee has no direct and substantial interest in its claim of unconstitutionality because of its failure to prove financial injury as a result of the tax. Appellants, therefore, conclude that the trial court erred in its ruling that Gateway has standing to challenge the tax. We do not agree.
Appellants' first argument, that Gateway lacks standing to challenge the tax by virtue of its status as collector and not taxpayer, is clearly without merit under applicable Pennsylvania case law.
In both Airway Arms, Inc. v. Moon Area School District, 498 Pa. 286, 446 A.2d 234 (1982), app. dismissed sub. nom. Grant-Oliver Corp. v. Moon Area School District, 459 U.S. 1094, 103 S.Ct. 711, 74 L.Ed.2d 942 (1983); and William Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 346 A.2d 269 (1975) (plurality opinion), the tax collection liability of parking lot operators was sufficient to confer standing to challenge the constitutionality of a tax imposed upon the consideration received by the operators from their patrons. The test for standing articulated by this Court in William Penn was "that one who seeks to challenge governmental action must show a direct and substantial interest . . . . In addition he must show a sufficiently close causal connection between the challenged action
and the asserted injury to qualify the interest as 'immediate' rather than 'remote'." Id., 464 Pa. at 202, 346 A.2d at 286.
In the Court's analysis of the requirements of the standing test, "substantial interest simply means that the individual's interest must have substance -- there must be some discernible adverse effect to some interest other than the abstract interest of all citizens in having others comply with the law . . . . [D]irect simply means that the person claiming to be aggrieved must show causation of the harm to his interest by the matter of which he complains . . . .
"The remaining requirements are that the interest be 'immediate' and 'not a remote consequence of the judgment' . . . . Here, the concern is with the nature of the causal connection between the action complained of and the injury to the person challenging it . . . . [I]t is clear that the possibility that an interest will suffice to confer standing grows ...