Court Opinion

ID: 6254176
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:25:07.285435+00
Date Added: 2024-06-11T08:59:30.119389
License: Public Domain

Dissenting Opinion by
Mr. Justice Moschzisker,
October 7, 1918:
It seems to me the consideration of a case such as the one in hand should be approached with this guiding thought in mind: the law contemplates each person shall pay his own income tax, and that course must be pursued unless it plainly appears another has contracted to assume the burden for him. Here, as I read the contract and understand the law, it does not appear that the ground landlord undertook to pay any part of the income tax assessed against the owner of the rent. In other words, to my mind, the court below was right in deciding that the income tax assessed against plaintiffs was neither in fact nor law specifically levied upon the ground rent and, therefore, was not comprehended by the covenant here sought to be enforced against defendant. \
Plaintiffs are liable to a tax on “the net income” accruing, during the year in question, on the entire estate in their charge, and this is arrived at by considering, as factors or elements, certain defined kinds of gross income, less several characters of credit designated in the act of Congress; but, as said by President Judge Sulzberger, of the court below, “The provisions of the act......-show that the income tax is based on a multiplicity of factors, whose sum, when ascertained, is reduced by other factors, and that the figure which finally becomes the measure of the income tax cannot be referred to any specific item whatever......The whole scheme of the act shows that its immediate relation is with the person charged.”
I cannot agree with the reasoning of the majority that “if the accruing yearly rent......is not income, within the meaning of the act......, then no income tax was *366due thereon, and, appellant not haying paid to or for plaintiff the whole of the annual ground rent, ...... either it or its land is liable for the balance thereof.” Of course, the installment of rent in question is an element which enters into the assessment against plaintiffs, and, therefore, defendant, being the person at the source required under , the act to make payment, is liable as collector for the government, and, for that reason, has the legal right to withhold the amount to be paid by him from the current installment of rent due plaintiffs; but, again quoting from the court below, “It is obvious that this act makes the covenantor [defendant] a mere agent of the covenantee [plaintiff] to pay definitely or provisionally, as the case may be, a part of the latter’s income tax. The words are unmistakable. The covenantor here is to return and pay, fin behalf of’ the covenantee, not a tax, hut ‘an amount equivalent to the normal income tax’ upon the amount in its hands on account of the covenantee......Taxation at the source is only a method of guarding against neglect, error or fraud......If the amount to be withheld be in excess of the tax due, provision is made to avoid the withholding from the person entitled, or, if actually paid over, to obtain for such persons refund from the government.” The amount in controversy here does not exceed the total income tax due by plaintiffs; hence defendant properly withheld it, and, accordingly, is entitled to judgment on the case stated.
I shall not undertake to distinguish the decisions of this or the Federal Supreme Court which deal with the general subjects now before us; for present purposes, it is sufficient to say that, to my mind, none of them determines the precise point involved in this case; but I may add that, in the last analysis, the income tax payable by an individual is in reality a proportionate conscription of his current receipts of money, which burden, like conscription of the person, should not be considered subject to transfer by bargain, unless and until the Government expressly so ordains; and, if possessed of *367tbe power, I would have no hesitancy in thus determining.
I would reverse the Superior Court and affirm the judgment of the court below; holding the views here indicated, which will be found elaborated in the opinion of the learned President Judge of the latter tribunal (see Van Beil v. Brogan, 23 Pa. Dist. R. 1055), I note this dissent, in which my Brother Walling joins.