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City of Philadelphia, Trustee Under v. Cumberland County Board of

April 4, 2011


The opinion of the court was delivered by: Dan Pellegrini, Judge

Argued: March 8, 2011



The Cumberland County Board of Assessment Appeals (County) appeals from the order of the Court of Common Pleas of Cumberland County (trial court) granting summary judgment to the City of Philadelphia (City), Trustee under the will of Stephen Girard, Deceased (Girard), Acting by the Board of Directors of City Trusts (Board), finding that certain investment property owned by the trust created by Stephen Girard (Trust) was immune and exempt from taxation by the County and its subdivisions. For the reasons that follow, we reverse.

The facts of the instant dispute are simple and undisputed, but must be considered in light of the long and complicated history of the Trust and the Board. The City, as trustee of the Girard Trust, owns property (Property) in the County that it leases to the Commonwealth of Pennsylvania, Office of the Attorney General, as office space. The Attorney General pays a monthly rent of $42,677.57. The income from the Property is used exclusively for the operations of Girard College (School),*fn1 a creation of the Girard Trust located in the City. The taxing authorities of the County, the Borough of Lemoyne and the West Shore School District assessed property taxes against the Property. The Board filed an application for tax exemption with the County in 2002, requesting an exemption from the real estate taxes because the Board is an instrumentality of the Commonwealth that is immune from local taxation and, alternatively, because the Board's real property is exempt from taxation as it is leased for a public purpose to the Commonwealth. The County denied the Board's exemption request, but on appeal, the trial court found that the Board was immune from taxation and that the Property was exempt, causing over $300,000 in taxes to be refunded by the taxing bodies. This appeal by the County followed.*fn2


Before turning to the arguments of the parties, it is necessary to provide the history of the relationship between the Trust and the Board and the lengthy history of litigation concerning the nature of the Board in order to place this case in its proper context.*fn3

In 1831, Stephen Girard, a shipping and banking magnate and one of the richest men in America, died. He left a will that was enormously generous to many public causes, not least of which was the School. Among other things, he left his entire residuary estate to "[t]he Mayor, Aldermen and Citizens of Philadelphia" in trust to erect the School, a boarding school which was to educate "poor male white orphan children" between the ages of six and 10. The will contained detailed provisions concerning where and how the School would be built and how it would embark on its task of educating these children. Relevant terms of the will can be found at In re Estate of Stephen Girard (Girard I), 386 Pa. 548, 127 A.2d 287 (1956), reversed by Commonwealth of Pennsylvania v. Board of Directors of City Trusts of the City of Philadelphia, 353 U.S. 230 (1957).

Three months after Girard's death, the Pennsylvania General Assembly enacted legislation directing the City to carry the will into effect.*fn4 Two weeks later, the General Assembly authorized the City to provide "for the election or appointment of such officers and agents as they deem essential to the due execution of the duties and trusts enjoined and created by the will of Stephen Girard."*fn5

In 1844, the United States Supreme Court decided Vidal v. Philadelphia, 43 U.S. 127 (1844), holding that the City had the power to accept Girard's bequest in trust and administer the Girard Trust under the 1832 statutes vesting legal title to the Trust assets in the City. Three years later, the General Assembly enacted legislation making the City the guardian of the person and property of every child admitted to the School and to bind out graduates to suitable occupations following their graduation.*fn6 Additionally, from 1833 to 1869, the Philadelphia City Council (City Council) passed 48 ordinances dealing exclusively with the School in all areas of planning and operation. Following several delays, the School finally opened in 1848 under the direct management, supervision and authority of the City Council.

In 1869, the General Assembly created the Board, which was composed of the Mayor of Philadelphia, the Presidents of the Select and Common Councils and 12 other citizens to be appointed by the Court of Common Pleas of Philadelphia County. The Board took over the direct and immediate management of the Trust, including the School, as well as numerous other charitable trusts vested in the City. This statute is still in operation today.*fn7 The following year, our Supreme Court in Philadelphia v. Fox, 64 Pa. 169 (1870), upheld the constitutionality of the Act, described the actions of the Board as "one class of the functions of the municipality" and equated the Board to municipal agencies such as police departments or schools. 64 Pa. at 183. Then, in 1899, the Superior Court in Fairbanks v. Kirk, 12 Pa. Super. 210 (1899), held that a writ of attachment could not be executed against the Board because it was a municipal corporation. Litigation continued throughout the twentieth century attempting to determine the nature of the Board and its relationship with the City, State, Girard Trust and School. In 1936, our Supreme Court in Wilson v. Board of Directors of City Trusts, 324 Pa. 545, 188 A. 588 (1936), held that the Act transferred one function of City government to the Board, which was a constituent of City government.

Then, in 1956, our Supreme Court in Girard I held that black children could not be admitted to the School because in his will, Girard specifically limited admission to white children. The United States Supreme Court, in Commonwealth v. Board, reversed holding, "The Board which operates Girard College is an agency of the State of Pennsylvania." Id. at 231. The Supreme Court offered no reasoning for its conclusion that the Board was a state agency, but the context was a 14th Amendment discrimination action. The Supreme Court then remanded to the Pennsylvania Supreme Court, which remanded to the Philadelphia County Orphans Court. The Orphans Court, rather than ordering the School to admit black children, stripped the Board of its trusteeship over the School and replaced it with private citizens. On further appeal to our Supreme Court, Girard II, 391 Pa. 434, 138 A.2d 844 (1958)) (cert. denied, Commonwealth of Pennsylvania v. Board of Directors of City Trusts of the City of Philadelphia, 357 U.S. 570 (1958)), affirmed the Orphans Court. It held:

We are unable to perceive the slightest basis for the contention [that the School is a public charity] either in Girard's will or in legislation ...

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