Case Name: Ehrlich et al. v. Brogan et al., Appellants
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1918-10-07
Citations: 262 Pa. 362
Docket Number: Appeal, No. 142
Parties: Ehrlich et al. v. Brogan et al., Appellants.
Judges: Before Brown, C. J., Stewart, Mosci-izisker, Frazer, Walling, Simpson and Fox, JJ.
Reporter: Pennsylvania State Reports
Volume: 262
Pages: 362–367

Head Matter:
Ehrlich et al. v. Brogan et al., Appellants.
Deeds — Ground rent deeds — Covenants to gay taxes — Federal income tax — Construction—Case stated — Act of Congress of October 8,1918, St. at L. 166.
1. The Federal Income Tax Act of October 3, 1913, IJ. S. Statutes at Large 166, being silent on the subject, the language of the contract itself must govern in determining which of the contracting parties is, as between themselves, liable for the1 tax on the income accruing thereunder.
2. Only such judgment can be entered on a case stated as the parties have therein agreed upon.
Mr. Justice Moschzisker and Mr. Justice Walling! dissent.
Argued July 16, 1918.
Appeal, No. 142, Jan. T., 1917, by defendant, from judgment of Superior Ct., Oct. T., 1915, No. 5, reversing judgment of C. P. No. 2, Philadelphia Co., Sept. T., 1914, No. 4225, for plaintiff in case of Franz Ehrlich, Jr., and the Pennsylvania Company for Insurances on Lives and Granting Annuities, Executors of the Will of Mary Van Beil, deceased, v. Daniel E. Bro gan and the Finance Company of Pennsylvania.
October 7, 1918:
Before Brown, C. J., Stewart, Mosci-izisker, Frazer, Walling, Simpson and Fox, JJ.
Affirmed.
Appeal from Superior Court.
The opinion of the Superior Court states the facts. See 65 Pa. Superior Ct. 384.
The court of Common Pleas entered judgment in favor of the plaintiff for $85 and costs. The Superior Court reversed the judgment of the Court of Common Pleas. Defendant appealed.
Error assigned was the judgment of the Superior Court.
William N. Trinkle, with him John G. Bell, of Bell, Trinkle & Beeler, for appellant.
Under the covenant of the ground rent deed, the income tax would not be levied upon the periodical payments until after they had become due and payable to the ground rent landlord; the covenant to pay the taxes ivas a mere personal obligation which did not run with the land: Focht’s Est., 2 Woodward 269; Catawissa R. R. Co. v. Philadelphia & Reading Ry. Co., 255 Pa. 269, 271; Robinson v. County of Allegheny, 7 Pa. 161; Klaer v. Ridgway, 86 Pa. 529.
R. W. Archbald, Jr., for appellees,
cited: North Penna. R. R. Co. v. Philadelphia & Reading Ry. Co., 249 Pa. 326.

Opinion:
Opinion by
Mr. Justice Simpson,
The facts in this case are accurately stated in the opinion of the Superior Court (65 Pa. Superior Ct. 384), and need not be repeated here. Its reasoning and judgment also are correct, and but little need be added thereto, except to answer the complaints of appellant that certain of its arguments were not considered by that court, or if considered were not given due weight.
It may be said, however, that if the accruing yearly rent reserved in the deed from Mary Van Beil to Daniel E. Brogan, is not income, within the meaning of the Act of Congress of October 3, 1913, then no income tax was due thereon, and, appellant not having paid to or for plaintiff the whole of the annual ground rent "due and payable June 1, 1914," either it or its land is liable for the balance thereof. On the other hand, if the accruing yearly rent is income within the meaning of the act of Congress, then, as it was agreed in the deed that the reserved rent should be paid "without any deduction, defalcation or abatement for any taxes, charges or assessments......on the yearly rent hereby and thereout reserved," and as the grantee covenanted for himself, his heirs and assigns to "pay all taxes whatsoever that shall hereafter be laid, levied or assessed by virtue of any law whatever......on the said yearly rent," when appellant, as his assignee, paid to the United States the normal tax thereon, it only paid that for which, in addition to the annual rent itself, its land, if not it itself, was liable; and hence it or its land is still liable to plaintiff for the balance of the ground rent claimed. We do not agree with appellant that the above-quoted provisions of the deed relate to the corpus of the rent. By their terms they relate to the "yearly rent," which the deed itself defines as "the yearly rent or sum of $10,000."
Nor is appellant more fortunate in its contention that judgment should be entered for it, because the covenants above quoted are the personal covenants of Daniel E. Brogan only. The case stated says that the action is a summons assumpsit sur ground rent deed, and asks the courts to decide only "Whether under the facts stated the plaintiff is entitled to recover," in that action, the balance of $25, still unpaid. It is not necessary to determine, therefore, whether or not technically the judgment provided for should have been for one de terris only. Fol-1 owing the case stated we decide that the Superior Court was correct in holding that the plaintiffs are entitled to recover in this suit the unpaid balance of $25, and the counsel fee agreed upon; and hence the judgment is affirmed.