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HORIZON FINANCIAL v. FRANCIS B. FURRICK AND JUDITH A. FURRICK (05/02/88)

decided: May 2, 1988.

HORIZON FINANCIAL, F.A.
v.
FRANCIS B. FURRICK AND JUDITH A. FURRICK, HIS WIFE. MUNICIPALITY OF BETHEL PARK, APPELLANT



Appeal from the Order of the Court of Common Pleas of Allegheny County, in the Case of Horizon Financial, F.A. v. Francis B. Furrick and Judith A. Furrick, his wife, No. GD86-13905.

COUNSEL

John Linkosky, with him, Victor R. Delle Donne, Baskin, Flaherty, Elliott & Mannino, P.C., for appellant.

Stephen F. Capone, for appellee.

Judges MacPhail and Colins, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 115 Pa. Commw. Page 522]

The Municipality of Bethel Park (Bethel Park) appeals the order of the Court of Common Pleas of Allegheny County entered on January 22, 1987 disallowing its claim and ordering the refund to Horizon Financial, F.A. (Horizon) of the amount in controversy.*fn1 We affirm.

This appeal arises from separate claims by Bethel Park and by Horizon against proceeds of the judicial sale of real estate of Francis B. and Judith A. Furrick. Horizon's claim stems from a mortgage foreclosure, and Bethel Park's claim is from unpaid earned income and net profits taxes.*fn2 Pursuant to the mortgage foreclosure action filed by Horizon, an execution sale of the Furrick real estate was held on December 1, 1986. Horizon purchased the Furricks' property at the sale for $4,495.43 representing costs and taxes. The Sheriff's proposed schedule of distribution indicated that $3,335.65 would be paid from this amount to Bethel Park as payment of its judgment against the Furricks.

Horizon filed exceptions to this proposed schedule of distribution contending that Bethel Park's claim against the Furricks did not have priority over Horizon's mortgage claim. The trial court held that the claim of Bethel Park was not a municipal claim and, therefore, did not have priority over the prior recorded mortgage.

[ 115 Pa. Commw. Page 523]

The narrow issue for us to determine is whether a judgment obtained by a municipality for non-payment of earned income and net profits taxes levied by a municipality is entitled to priority under the provisions of Section 3(a) of the Act of May 16, 1923, P.L. 207 (Act), as amended, 53 P.S. § 7106(a), which provides that municipal claims which are timely "imposed or assessed on any property" shall be fully paid and satisfied before any other obligation, judgment, claim, lien, or estate.

Since it is provided by Section 8141 of the Judicial Code (Code), 42 Pa. C. S. § 8141, that adverse judgments have priority only from the date of their filing, Bethel Park's judgment is entitled to no priority here unless it qualifies for such priority under the Act.

Municipalities were given the authority to assess and collect earned income and net profits taxes by the provisions of Section 13 of The Local Tax Enabling Act, Act of December 31, 1965, P.L. 1257 (LTEA), as amended, 53 P.S. § 6913. Article VII of Section 13 authorizes the tax collection officer to institute suit for the recovery of LTEA taxes due and unpaid. We assume that this was the means by which Bethel Park obtained its judgment in the instant case.

Bethel Park, citing Sections 1, 2 and 3 of the Act, 53 P.S. §§ 7101, 7103 and 7106, argues that the statutory language entitles its ...


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