Appeal from the Order of the Court of Common Pleas of Philadelphia County, in case of City of Philadelphia v. Walter R. Hertler, Officer of Bainbridge Green Corp., t/a Shippens, and Morton Malamet, Officer of Bainbridge Green Corp., t/a Shippens, No. 1663 January Term, 1985.
Edward A. Taraskus, for appellant.
Phyllis J. McHale, Assistant City Solicitor, for appellee.
Judges Doyle and Palladino, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Doyle. Senior Judge Kalish dissents.
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This is an appeal by Walter Hertler from an order of the Court of Common Pleas of Philadelphia County which granted the motion of the City of Philadelphia (City) for judgment on the pleadings. The effect of the trial court's order was to declare Hertler a trustee ex maleficio and, hence, adjudicate him as personally responsible for delinquent wage taxes collected by a now defunct corporation, Bainbridge Green Corporation t/a Shippens (Corporation), for which he served as president. The sum in dispute is $13,480.61 plus interest and penalties.
In its complaint, the City alleged that pursuant to the City Wage and Income Tax Ordinance, a tax is imposed upon all salaries, wages, commissions and other compensation received for work done or services rendered in the City. Further, Section 19-1504 of the Philadelphia Code provides that each employer who employs one or more persons within the City shall deduct wage taxes, file wage withholding tax returns with the City, and remit the tax due to the City. It is alleged that the Corporation employed one or more persons to whom it paid compensation in the years 1976 to 1980
[ 114 Pa. Commw. Page 478]
inclusive, and that wages were withheld from those employees by the Corporation. It is also alleged that such wages were not remitted to the City. According to the City's complaint, the Corporation has failed or refused to pay the sums in dispute. Further, the Corporation at no time filed a petition for review with the Philadelphia Tax Review Board. The City has demanded payment from the Corporation but it has failed to remit said sums. Further, it is specifically alleged in paragraph 14 of the complaint, "Defendant [Hertler] as an officer of [the Corporation] operated and managed said corporation and had control of the withholding and payment of the wage withholding taxes during the relevant time period." Hertler denied this allegation as follows "It is specifically denied that answering defendant had control of the withholding and payment of wage withholding taxes. On the contrary, any control of the withholding and payment of wage withholding taxes, if any, was within the Secretary or Treasurer of the corporation or some other individual." Finally, the complaint alleges that the taxes withheld are the property of the City and prays that the Court declare Hertler as a trustee ex maleficio of the wage taxes due the City.
In his answer to the complaint, Hertler, while admitting that he had been president of the Corporation, responded to virtually every paragraph of the complaint, with the exception of Paragraph 14, by denying each allegation generally, or by pleading that the allegation constituted a conclusion of law to which no answer was required. Further, Hertler, by way of new matter, alleged that the City had failed to state a cause of action, and that its action was barred by Section 5527 of the Judicial Code, 42 Pa. C. S. § 5527, (providing a six year statute of limitations for certain actions), laches, and failure to exhaust administrative remedies. Additionally, in new matter Hertler stated that "At no time relevant
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herein did answering defendant collect, handle, manage, control or convert to his own use any money or taxes due plaintiff."
Subsequent to the close of the pleadings, the City filed a motion for judgment on the pleadings to which Hertler filed an answer. The trial court granted the City's motion on the theory that Hertler had failed to exhaust his administrative remedies. The lower court also determined that the defenses of the statute of limitations and laches were inapplicable here, and that there were no factual issues in dispute which would preclude ...