Court Opinion

ID: 3853544
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:36:52.162038+00
Date Added: 2024-06-11T07:41:01.534909
License: Public Domain

This is a tax on property, and the property subject to taxation is actually located in Philadelphia County (Griscom's Estate, 333 Pa. 186; Dorrance's Estate, 333 Pa. 162;Girard Trust Co., Trustee's Appeal, 333 Pa. 129), but the majority hold that the legislature has power to direct that other counties wherein the trustees severally reside shall collect the tax and receive the benefit of proportionate shares of such property. The principal basis for so holding is that no provision of our Constitution prohibits this result, and that, therefore, the legislation must be sustained as a valid exercise of the taxing power. I differ with them in two respects.
First, I contend that the taxing power of the state cannot be exercised in an arbitrary manner by taxing property in one county for the benefit of another county merely because there is no specific prohibition against it; that it is unnecessary for the Constitution to expressly prohibit such legislation. This amendment violates *Page 42 
the basic principle of taxation that there must be some relation between the tax and the benefits which it secures to the persons or property upon which it is levied.
In Cooley, Constitutional Limitations (8th ed. 1927), Volume 2, at page 1026, the learned author says: "Having thus indicated the extent of the taxing power, it is necessary to add that certain elements are essential in all taxation, and that it will not follow as of course, because the power is so vast, that everything that may be done under pretense of its exercise will leave the citizen without redress, even though there be no conflict with express constitutional inhibitions. Everything that may be done in the name of taxation is not necessarily a tax; and it may happen that an oppressive burden imposed by the government, when it comes to be carefully scrutinized, will prove, instead of a tax, to be an unlawful confiscation of property, unwarranted by any principle of constitutional government."
This State was among the first of American jurisdictions to recognize that cardinal principle. In Sharpless v. Mayor ofPhiladelphia, 21 Pa. 147, Chief Justice BLACK pointed out that one individual or one municipal subdivision could not be arbitrarily taxed for the benefit of another, despite the fact that no provision of the state constitution expressly prohibited it. He said at page 168: "But I do not mean to assert that every act which the legislature may choose to call a tax law is constitutional. The whole of a public burden cannot be thrown on a single individual, under pretence of taxing him, nor can one county be taxed to pay the debt of another, nor one portion of the state to pay the debts of the whole state. These things are not excepted from the powers ofthe legislature, because they did not pass to the Assembly bythe general grant of legislative power. A prohibition was not necessary. An Act of Assembly, commanding or authorizing them to be done, would not be a law, but an attempt to pronounce *Page 43 
a judicial sentence, order or decree." (Italics added.)
In Hammett v. Philadelphia, 65 Pa. 146, at page 151, Justice SHARSWOOD said: "There is, indeed, no clause in the Constitution of Pennsylvania which restricts the power of taxation in the legislature as is to be found in the constitutions of many of our sister states. Yet it must beconfessed that there are necessary limits to it in the verynature of the subject. It is very clear that the taxing power cannot be used in violation of provisions in the Bill of Rights, everything in which is 'excepted out of the general powers of government, and shall forever remain inviolate.'There is no case to be found in this state, nor, as I believeafter a very thorough research, in any other — withlimitations in the Constitution or without them — in which ithas been held that the legislature, by virtue merely of itsgeneral powers, can levy, or authorize a municipality to levy,a local tax for general purposes . . . It may be shown logically, and that without difficulty, that such a doctrine lands us in this absurd proposition: That the whole expenses of government, general and local, may be laid upon the shoulders of one man, if one could be found able to bear such a burden. A conclusion so monstrous shows that the premises must be wrong. Such a measure would not be taxation, but confiscation." (Italics added.)
In Morewood Avenue. Chamber's Appeal, 159 Pa. 20, at 38, Justice GREEN said: "Laws which cast the burthens of the public on a few individuals, no matter what the pretence or how seeming their analogy to constitutional enactments, are in their essence despotic and tyrannical, and it becomes the judiciary to stand firmly by the fundamental law in defence of those general great and essential principles of liberty and free government, for the establishment and perpetuation of which the constitution itself was ordained." *Page 44 
While the last two were cases involving assessments for street improvements, yet these expressions deal with the power of the legislature to impose a tax like the present one for the purpose mentioned, and the principles stated stand in full opposition to the conclusions of the majority. See also Cooley on Taxation (4th ed. 1924), Section 314, where it is said: "In order to give validity to any demand made by the state upon its people under the name of a tax, it is essential not only that the purpose to be accomplished thereby shall be public in its nature, but it is equally essential, that the purpose shall be one which in an especial and peculiar manner pertains to the district within which it is proposed that the contribution called for shall be collected, and which concerns the people of that district more particularly than it does others." And further in the same section, where the author says: "A state purpose must be accomplished by state taxation, a county purpose by county taxation, and a public purpose for any inferior district by taxation of such district. This is not only just but it is essential. To any extent that one man iscompelled to pay in order to relieve others of a public burdenproperly resting upon them, his property is taken for privatepurposes as plainly and as palpably as it would be ifappropriated to the payment of the debts or the discharge ofobligations which the person thus relieved by his paymentsmight owe to private parties." (Italics added.)
Other jurisdictions give similar expressions of the rule. Thus in Keith v. Lockhart, 171 N.C. 451, 88 S.E. 640, where the court struck down an act of the legislature which required one township to bear the expense of a cattle fence which would benefit another township, the court said: "This, too, is a recognized principle that, under ordinary conditions, the property of one district may not be taxed when it clearly appears that such tax is for the exclusive benefit of another." In High School District v. Lancaster County, *Page 45 60 Neb. 147, 82 N.W. 380, the court held void an act imposing upon a school district the partial cost of the education of students residing beyond its limits, because "it would, in effect, . . . be taxing one portion of a county for the benefit of another portion . . ."
In Campbell County v. City of Newport, 174 Ky. 712,193 S.W. 1, it was stated that the legislature could not authorize any municipal sub-division to levy a tax on property located in another municipal sub-division. In Farris v. Vannier, 6 Dakota 186, 42 N.W. 31, it was held that an act requiring that the real and personal property in unorganized counties be assessed and taxed for local and territorial purposes in the nearest organized county, was unconstitutional. The court said: "It seems to us that this law is an attempt on the part of the legislature to tax one community for the benefit of another, and is therefore void, from the fact that all taxation must be public and local, and for objects in which those who pay the tax have, in a legal sense, some interest, and from which they may receive some benefit."
The four-mill tax is a tax not upon persons but upon property: Girard Trust Company, Trustee's Appeal, supra. It is clear, furthermore, that the intangible property of trusts which are administered in Philadelphia County, where its tangible evidences are located, is personal property within Philadelphia County. It receives police, fire and other governmental protection from Philadelphia and should share the costs of such protection.
The reason for taxation lies in the protection which the government affords to the persons and property of its citizens. The trust property in Philadelphia receives no benefit from the local government of Montgomery County, and to distribute the tax as the legislature here proposes, amounts to confiscation; it is in effect a taking of property for a private purpose just as surely as if it were applied to defraying the *Page 46 
private debts of the citizens of Montgomery County. They are relieved of so much of their share of the costs of their local government at the expense of property in another county. This cannot be justified on the coincidence that a single trustee resides in that county, for the tax is not upon him but upon the property, and whatever benefit he receives he receives not as trustee but as an individual, for which he should pay a personal tax. Nor may it be justified because the trust property is within the taxing jurisdiction of the State and unquestionably subject to taxes for State purposes. Although the tax is levied by the State, it is collected by the counties, and it is levied exclusively for the benefit of the counties in which it is collected. The State clearly would have no power to authorize Montgomery County to tax personal property within Philadelphia County; yet here it is accomplishing that result. The legislature cannot by indirection do what it could not do directly.
We have held that the situs of intangible trust property, for taxation, is in the county in which the tangible evidences are held, and in which the trust is administered. But, secondly, even assuming, despite our decisions, that it has no actual situs and that the legislature could, by a general law, establish the situs of all such property as it sees fit, it cannot do so as to a single type of trust in the manner proposed by this Act. The express provision of Article IX, Section 1, is that: "All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws; . . ."
If the property of a trust is located, managed and administered in Philadelphia County, as here, there may be four distinct classifications: First, where a sole trustee of the property lives in Montgomery County; second, where there are multiple trustees, one or more of whom reside outside of Philadelphia County; third, where *Page 47 
there are multiple trustees all of whom reside in Philadelphia County; fourth, where there are multiple trustees, one of whom resides out of the State. In the first, third and fourth situations, the property tax is collected and paid in Philadelphia County. In the second only, is the property which is taxed apportioned among the several counties in which the trustees reside. If there is any reasonable basis for classification in the fact of the trustees' residence, then the tax in the first situation should go to Montgomery County; but the Act deals only with multiple trustees. If the protection afforded by the place of the trustees' residence is the basis of the classification, then in the fourth situation a proportionate share of the trust property should not be taxed, as one trustee is a non-resident. It seems to me that this exemplifies the artificiality of the classification, for if the legislature intended that the property of trusts administered by multiple trustees should have its situs for taxation at their several residences, it should have provided that, where one of the trustees resides beyond the borders of Pennsylvania, his proportionate share of the trust property would not be taxed in this State. Yet this was not done. Clearly, this distinction as to residence affords no proper basis for separately classifying these trusts for the purposes of a property tax. In one case the long-forsaken doctrine of mobiliasequuntur personam is used in determining the taxable situs of the property, and in the others it is not. Classification, to be valid, must be based upon a sound distinction between the classes and not upon an arbitrary distinction which has no reference to the purpose to be effected by the legislation. Since the classification attempted by this amendment lacks this essential requirement, the legislation clearly violates the uniformity provision of our Constitution.
Additionally, it may be said that nowhere in the title of this Act does it appear that the amendment would take from certain counties large portions of their revenue *Page 48 
for the benefit of other counties having no control over the subject-matter of the tax. It may well be that, had the legislators been informed by the title of the inequitable and peculiar results the amendment would produce, it would not have been approved. I do not, however, press this point, because of the more basic objections which I have set forth.
Because I cannot bring myself to join in any decision which would open the door to the taxation of property of persons in one county solely for the benefit of those in another, I dissent from the opinion of the majority.
Mr. Justice BARNES joins in this dissent.