Delaware & Hudson Canal Co. v. Commonwealth , 43 Pa. 227 ( 1860 )

The opinion of the court was delivered, in by

Read, J.

In 1849, the Court of Common Pleas of Dauphin county, upon an appeal by the present plaintiffs in error from a settlement of the auditor-general and state treasurer, decided that, prior to the Act of the 11th of April 1848, the president, managers, and company of the Delaware and Hudson Canal Company were not liable to any tax on their capital stock or dividends, by virtue of any general or special laws of the state. The judgment entered in favour of the company was affirmed on writ of error by the Supreme Court, on the 5th of July 1859, after a very full and exhaustive argument, oral and printed, on both sides. This settled definitively, as to this New York corporation, the construction of all acts prior to the Act of 11th April 1848, which was the first taxing any part of their stock or dividends; and it is this act which we,are now called upon to construe.

The natural construction of the third section of the Act of 11th of April 1848, P. L., p. 497, is that the president and treasurer of the company were to prepare and communicate to the auditor-general, a statement under oath, setting forth the cost of all the works of said company in this state, and the amount of capital invested therein, providing expressly only for one statement, which was to be made before the declaration or payment of any further dividend, and a copy of this statement the auditor-general was directed to communicate to the legislalature at its next session, thus directly recognising one statement only (and not a series of consecutive yearly statements) as the basis of taxation. It then directs or declares the stock of the said company, 'equal in amount to the capital so invested (that is, as declared in said statement), subject to taxation, in the same manner and in the same rate as the stock of companies incorporated by the laws of this state is subject.

The effect of this is to make the capital stock so declared by this statement to be invested in this state, the amount which is thereafter to be subject to taxation, in the same manner as if it had been incorporated by the state with that amount of capital. It is then made the duty of the company, upon the declaration of any dividends thereafter, to cause their treasurer to retain out of such dividends, and pay into the treasury of this Commonwealth, the amount of state tax.

This being the construction of this act, the accounting officers and the court below were of course in error, and the account between the Commonwealth and the company should have been settled on the basis of the first and only statement recognised by the law. It is this act which prescribes the mode and manner of taxation, and which therefore governs this case, independent of all antecedent acts, and it is consistent with the case of The New York and Erie Railroad Co. v. Sabin, 2 Casey 242, and not inconsistent with that of The Commonwealth v. The Cleveland, Painesville, and Ashtabula Railroad Co., 5 Casey 370, where the circumstances were entirely different, and which did not depend upon the construction of a special act affecting that company only.

The judgment is reversed, and a venire de novo awarded.