Court Opinion

ID: 6259858
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:59:20.111259+00
Date Added: 2024-06-11T08:59:40.641496
License: Public Domain

Opinion by
Mr. Justice Roberts,
Effective January 1, 1953, the City of Philadelphia enacted a Mercantile License Tax upon persons and *133companies engaged in certain business activities within the city. This tax was authorized by the Sterling Act, Act of August 5, 1982, P. L. 45, §1, as amended, 53 P.S. §15971. The appellants, however, believed that the imposition of the tax as to them was a violation of the exemption for state licensed companies contained in the Sterling Act. Therefore, in early 1953 they successfully sought a perpetual injunction prohibiting the city from taxing them under the Mercantile License Tax. This injunction continued in full force and effect until 1968, when it was modified at the request of the city.
This modification was apparently precipitated by this Court’s decisions in Y.M.C.A. v. Reading, 402 Pa. 592, 167 A. 2d 469 (1961), Pinebrook Foundation, Inc. v. Shiffer, 416 Pa. 379, 206 A. 2d 314 (1965), and Bell Telephone Co. v. Philadelphia, 421 Pa. 14, 218 A. 2d 727 (1966). These decisions answered the question whether “an erroneous interpretation of a taxing statute by a tax official supports his being prohibited from again enforcing that taxing statute against the decree winner.” We concluded that “such action may not be proscribed.” Bell Telephone Co. v. Philadelphia, supra at 16.
It is conceded by all parties to this litigation that the injunction the appellants obtained in 1953 falls within the prohibited class of injunctions established in the Y.M.C.A.-Pinebrook Foundation, Inc.-Bell Telephone Co. line of cases. Therefore, the decision by the court below to modify the 1953 injunction is essentially correct. The only issue presented for our consideration is whether the injunction should have been modified as it was—to only enjoin the collection of the Mercantile License Tax through the end of 1953—or whether the injunction should have been modified so as not to affect those tax years prior to the city’s challenge of the *134decree and its initiation of the modification proceedings in 1967.
The city argues that the modification of the decree should be completely retroactive. To support this proposition it cites both the Bell Telephone and Pinebrook Foundation cases. In both of these, the modification of the decree resulted in completely retroactive application of the rule against enjoining the collection of taxes. In opposition, appellants cite this Court’s disposition in the original decree modification case, Y.M.C.A. v. Reading, and certain equitable principles which should be given effect in a situation such as this one. Specifically, appellant quotes from Y.M.C.A.: “Because of the parties’ reliance upon past practice and because of the time lapse that would impose an inequitable hardship on the litigant, we shall determine the present controversy . . . .” 402 Pa. at 598, 167 A. 2d at 472.
It is our view that appellants’ argument must be upheld. Since in these cases of necessity we must give effect to equitable principles (as well as this Court’s decision as to injunctions in tax cases), we believe it is reasonable that the city be permitted to assert tax liability only as to those years after which appellants were put on notice that the original decree might be modified. To do otherwise would tear down some of the most basic foundations of our jurisprudence—the requirements of timely appeals and of finality of judicial adjudications.
Here the city and appellants litigated the Sterling Act exemption in 1953, the city failed to appeal from that determination, and the companies relied on the exempt status for thirteen years (as did the city) — during which time mergers took place, business records were destroyed and business decisions were made on the basis of a final judicial adjudication upon which *135the taxpayers had every right to rely. Then, in 1967, the city chose to reopen the matter and attack the 1953 decree. Under these circumstances, to allow the city now to reach all the way back to 1951 and assess its Mercantile License Tax would create a hardship on the appellants and would upset the public policy goals of finality of litigation, and justifiable reliance on our Court decisions. It certainly would far outweigh any good which might be derived from such a move.
This Court has indeed declared that injunctions in tax cases such as this one are procedurally improper. But we did not do so until 1966. It hardly seems necessary for the implementation of such a policy that those who relied on such unappealed injunctions prior to our decision in Pinebrooh now suddenly be assessed with retroactive taxes from which they were judicially declared to be immune. The city as an aggrieved party had the right to appeal, which it did not pursue. To sustain the city’s retroactive tax claims is tantamount to ignoring the whole area of jurisprudence which demands timely appeals and to granting the city in reality an appeal nunc pro tunc sixteen years later. Such a holding would place the Court in the role of parens patriae of the taxing-body litigant. If this is a proper role for the Court to assume for a public taxing body, why not for all litigants? It seems sufficient to satisfy our purposes that such tax injunctions only be subject to modification at a date after the parties to such decrees were put on notice that their validity was in doubt.
Therefore, we conclude that the action of the court below in modifying the injunction to only apply to the years preceding and including 1953 does not comport with the equitable principles inherent in any such proceeding. For that reason, we modify the decree so that it reads: “That the City of Philadelphia is en*136joined from enforcing or attempting to enforce any and all provisions of the Ordinance against Abbotts Dairies, Inc.; Borden’s Ice Cream Company, division of the Borden Company; Breyer Ice Cream Company; Penn Dairies, Inc.; Philadelphia Dairy Products Co. Inc.; Potts Ice Cream Company; Quaker Ice Cream Company; Supplee-Wills-Jones Milk Company for the years preceding and including 1965.”
Decree affirmed as modified. Each party to pay own costs.