Commonwealth v. Phila. etc. C. & I. Co.

Opinion, Mr. Justice Mitchell :

A re-argument is asked for, especially on the imposition of the statutory penalty by this court in its final judgment. The question is of considerable practical importance; and, as it affected a number of other cases pending at the time, this motion was held over until the argument of those cases, in order that it might receive full consideration and final settlement. It was in the hands of our late Brother Clark at the time of his lamented death. This much I have thought it proper to say, in explanation of the delay in disposing of the motion.

We are not convinced that the court exceeded its proper authority in entering judgment for the penalty, notwithstanding the failure of the officers of the commonwealth to claim it and the court below to pass upon it. No neglect of the state officers upon whom the primary duty of assessing and imposing the penalty is cast by the statute, can prevent this court from passing the judgment required by the law when the facts of the case are before it. The argument, therefore, that the action of the court was an assumption of original jurisdiction in violation of article V., § 3 of the constitution of Pennsylvania, may be dismissed without extended consideration. Nor do the equally strained arguments on article I., §§ 9 and 11 of the constitution of Pennsylvania and articles V. and XIV. of the amendments of the constitution of the United States, those last resorts of desperate cases, require further notice.

*287 There does remain, however, the substantial question whether the facts of this case make it one for the imposition of the penalty.

By § 4 of the act of June 80, 1885, P. L. 194, it is made the duty of the treasurer of every private corporation, upon the payment of any interest upon scrip, bonds, etc., held by residents of this commonwealth, to assess the tax imposed for state purposes, to report to the auditor general the amount, etc., and to deduct the tax from the interest paid and return the same into the state treasury; “ and for every failure to assess and pay said tax, and make report as aforesaid, the auditor general shall add ten per centum as a penalty, to the amount of the tax.” This penalty, it is plain, is meant to enforce the performance of the duties which the statute casts upon the corporation treasurer in reference to the tax. It has no relevancy to questions that may arise between the corporation and the state officers, in the settlement of the amount and items of its account, or to any delay that may be incident to the proceedings according to law, by appeal or otherwise. The appeal is a legal right, and does not subject the appellant to any penalty not clearly and expressly imposed upon an unsuccessful appeal itself.

The treasurer of the coal and iron company, as appears, did assess the tax and make due report to the auditor general, but did not deduct the tax and “return the same into the state treasury.” This was apparently a default in the performance of the duties cast upon him by the statute. But, in fact, it appears that neither the treasurer nor the corporation made any payment of the interest. The corporation was in the hands of receivers, and the payments of interest in question were not made by it, but by the guarantor of its bonds, the Philadelphia & Reading Railroad Company. As, however, the interest so paid was charged by the railroad company to the coal and iron company, settled for in the settlement of its accounts, and the canceled coupons returned to the latter company, we held that “ for purposes of taxation that was equivalent to the actual payment of the interest ” by the coal and iron company: Commonwealth v. Coal & Iron Co., 137 Pa. 492 . That is the point actually decided; but, in writing the opinion of the court, the fact was accidentally overlooked that the actual payment was made by the railroad company, and that it was not until some time afterwards that the coal and iron company was charged with *288 and settled for the amount. While, therefore, this accounting and settlement were equivalent to an original payment, for purposes of taxation, they do not necessarily show a default by the treasurer of the coal and iron company by which the penalty of the statute was incurred. On the contrary, the facts show that the treasurer did assess the tax and make the required report to the auditor general. That he did not go further, and deduct the tax and return it into the state treasury, was not a default, because at that time neither he nor his corporation had the money or had made the payment of the interest.

A review of the rather complicated facts, which are here stated only in skeleton, has satisfied us that there was no default under the statute, and that the penalty should not be imposed.

The judgment heretofore entered by this court is modified by striking out the item for penalty ; the interest is re-calculated, and judgment is now entered as of this date for forty-six thousand one hundred and ninety-nine dollars and fifty-two cents.

March 21, 1892:

The attention of the court has been called to the fact that the imposition of interest at the rate of twelve per cent on unpaid balances and judgments for taxes in favor of the commonwealth, by virtue of the thirteenth section of the act of June 7, 1879, P. L. 119, was intended only for cases of intentional or unexcused delay on the part of the taxpayer. As the interest begins to run only at thirty and sixty days after the time the taxes and balances become due and payable, and on balances only from the time the auditor general shall have sent a statement of the amount due, this seems to be the fair construction of the act, and accords with the views expressed in Commonwealth v. Standard Oil Co., 101 Pa. 119, 150 .

We are of opinion that, under the circumstances of this case, the appellant should not be charged with the twelve per cent interest during the pendency of the motion for re-argument.

The judgment entered on March 14, 1892, is amended by striking out the interest from October 6, 1890, and is thereby reduced to forty-one thousand three hundred and eight dollars.