author: Me. Justice Elkin,

text:
    Elliot, Appellant, v. Philadelphia.

      Municipal corporations — Cities of first class — Increase of indebtedness —Taxable 'property — Last assessed valuation — Acts of April 20, 1874, P. L. 65, and May IS, 1856, P. L. 567 — Constitution, art. IX, sec. 8— Taxes — Personal securities.

    1. The last preceding assessed valuation of taxable property to be taken under the Act of April 20, 1874, P. L. 65, as the basis for computing the two per centum borrowing limit of the city of Philadelphia for the year 1910, under art. IX, sec, 8, of the constitution providing that “The debt of any county, city, borough, township, school district or other municipality, or incorporated district, except as herein provided, shall never exceed seven per centum upon the assessed value of the taxable property therein, nor shall any such municipality or district incur any new debt, or increase its indebtedness to an amount exceeding two per centum upon such assessed valuation of property, without the assent of the electors thereof at a public election in such manner as shall be provided by law,” is the assessment made by the assessors in 1909, as revised by the board of revision and certified to the receiver of taxes on or before February 1, 1910, in accordance with the provisions of the Act of May 13, 1856, P. L. 567. The practice giving the board of revision equitable supervision over the assessments after the duplicates are in the hands of the receiver of taxes for collection is of doubtful authority and should not be encouraged.
    2. The law requires all the preliminary steps in the valuation of property to be taken so that the assessment shall be completed when the duplicates are certified to the receiver of taxes on or before February 1, and all of these things are presumed to have been done, and in contemplation of law have been done when the board of revision certifies the duplicates to the receiver of taxes for collection.
    3. The character of a tax is determined by the act which authorizes its imposition, and not by the use made of the revenue thus derived.
    4. The tax laid on personal securities as “money at interest” by the act of 1879 and its supplements, is a state tax, although the commonwealth returns a large part of it to the counties, and the personal securities upon which the tax is levied cannot be considered as property taxable for purposes of a city or county within the meaning of the constitution.

      Municipalities — Cities of first class — Appropriation for schools— Estimates — City controller — Act of April 22, 1905, P. L. 267.

    5. Under the Act of April 22, 1905, P. L. 267, requiring the councils of a city of the first class to annually appropriate for school purposes a sum not less than five mills “on each dollar of the total assessment of real property of the school district,” an appropriation made upon estimates furnished by the controller acting on requisitions by the board of education is the nearest approach possible to the exact amount which upon a completed valuation may be shown to be required with the information at hand when the appropriation is made and it is the method recognized by law for the purpose stated. If the board of education accepts the amount appropriated, maintains the school system out of this appropriation and settles its accounts with the city for the school year upon this basis, it has no further claim for an alleged deficiency.

      Cities — Net indebtedness — Deductions—Solvent debts — Act of April 20, 1874, P. L. 65.

    6. The Act of April 20, 1874, P. L. 65, providing for the ascertaining of the net indebtedness of a city by deducting from the gross indebtedness “the moneys in the treasury, all outstanding solvent debts and all revenues applicable within one year to the payment of the debt,” is constitutional.
    7. Municipal authorities cannot arbitrarily say that every claim of the city is an outstanding solvent debt, or that revenue necessary to pay current expenses can be set apart for the liquidation of outstanding obligations, but where there are bona fide outstanding debts due the city and revenues not necessary to meet current expenses are available for the payment of indebtedness within the year, such assets can be used for deductions under the provisions of the act of 1874, in ascertaining the net indebtedness.
    8. The statutes relating to municipal loans do not provide that there shall be a definite statement of purpose in an ordinance for a loan for temporary or other purposes such as is required to give notice to the public by the act authorizing a loan only upon direct vote of the people. The practice, however, is, as it ought to be, to set out in the ordinance the purpose or purposes for which the indebtedness is to be incurred, even when the loan is for temporary purposes and authorized by ordinance without a vote of the people.
    Argued May 19, 1910.
    No. 357, Miscellaneous Docket No. 2, 1910. Original Bill in Equity by Frank S. Elliot, a citizen and taxpayer of the city of Philadelphia, in his own behalf and in behalf of such other citizens and taxpayers as may join, v. City of Philadelphia and John E. Reyburn, Mayor, John M. Walton, Controller, and Murrell Dobbins, Treasurer.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin and Moschzisker, JJ.
    Bill dismissed.
    Taxpayers’ bill in equity to restrain the issuance of a loan.
    The facts appear in the opinion of the Supreme Court.

      Hampton L. Carson and Thos. Raeburn White, with them Robert D. Jenks, and John Kent Kane, for plaintiff and for Logan M. Bullitt et al., intervening plaintiff.
    The debt capacity of the city should be based on the assessed valuation of taxable property for city purposes only: Bruce v. Pittsburg, 166 Pa. 152.
    The debt capacity is to be computed upon the last completed assessed valuation: C., B. & Q. R. R. Co. v. Village of Wilber, 63 Neb. 624 (88 N. W. Repr. 660); Levy v. McClellan, 196 N. Y. 178; Rathbone v. Kiowa County Commissioners, 83 Fed. Repr. 125; Board of Education v. National Life Ins. Co., 94 Fed. Repr. 324; State v. Babcock, 24 Neb. 640 (39 N. W. Repr. 783); Fuller v. Heath, 89 Ill. 296; Kingsbury v. Pettis County, 48 Mo. 207; Hopper v. Inhabitants of Union Twp., 54 N. J. Law, 243 (24 Atl. Repr. 387); Wilson v. Board of Education, 12 So. Dak. 535 (81 N. W. Repr. 952); Prickett v. Marceline, 65 Fed. Repr. 469; State v. Tolly, 37 S. C. 551 (16 S. E. Repr. 195); Germania Savings Bank v. Darlington, 50 S. C. 337 (27 S. E. Repr. 846).
    Loans authorized but unissued are to be considered in computing the borrowing capacity of the city.
    The city is under a present legal obligation to appropriate money for school purposes which obligation constitutes a part of the city’s debt: Wells v. Smyth, 55 Pa. 159; Bruce v. Pittsburg, 166 Pa. 152; Dixon County v. Field, 111 U. S. 83 (4 Sup. Ct. Repr. 315).
    Unliquidated claims for property taken or injured by the city, under its power of eminent domain, is a part of its unfunded debt: Keller v. Scranton, 200 Pa. 130; Levy v. McClellan, 196 N. Y. 178.
    Defendants are not entitled to deduct from the face of the indebtedness payments not yet made to the sinking fund, outstanding claims for taxes, water rents or miscellaneous claims standing on the books of the city: Brooke v. Phila., 162 Pa. 123.
    The specific purposes of the loan are not distinctly set out in the ordinance as the law requires: Sank v. Phila., 8 Phila. 117.

      J. Howard Gendell, city solicitor, and John G. Johnson, for defendant.
    Nothing is due the board of education. As to purchases made without authority, it seems almost needless to say that these are not binding upon the city, and therefore cannot be considered debts to be deducted from the city’s borrowing capacity: Smart v. Phila., 205 Pa. 329; McManus v. Phila., 201 Pa. 619; Hepburn v. Phila., 149 Pa. 335, and many other cases.
    July 1, 1910:
    As a pure matter of law, it is settled that the mere authority to incur a debt is not in itself the incurring of a debt. Authority to do an act is clearly not the doing of the act authorized: Redding v. Espien Boro., 207 Pa. 248.
    The city is entitled to certain credits which are not allowed in the bill: State v. Hopkins, 14 Wash. 59 (44 Pac. Repr. 134).
    The purposes for which the new loan is to be applied are sufficiently set forth: Barr v. Phila., 191 Pa. 438.
    The tax on “money at interest” is, in Philadelphia, a county tax partly to provide money to reimburse the county for a debt it must pay the state, but largely to give the county an additional income: Com. v. Phila. Co., 10 Atl. Repr. 772; County of Schuylkill v. Com., 36 Pa. 524; Com. v. Moore and the City of Phila., 7 Dauphin, 103; Com. v. Phila. County, 157 Pa. 531.
   Opinion by

Me. Justice Elkin,

The plaintiff, a resident taxpayer of the city of Philadelphia, seeks to enjoin the municipal authorities from making a loan authorized by ordinance for certain city purposes. The objections relate primarily to constitutional questions and for the purpose of this case may be discussed in a few general propositions. It is contended that the city has exhausted its borrowing capacity and by reason thereof cannot increase its indebtedness to the amount authorized by the proposed new loan. If in point of fact the city has already incurred an indebtedness sufficient to exhaust its borrowing capacity under the constitution the proposed additional loan would be without warrant of law and the authorities should be enjoined. In the determination of the fact, several questions of law are necessarily involved. The first important question to be considered is what assessment shall be taken as the basis of valuation in making the computation. Article IX, sec. 8, of the constitution provides: “The debt of any county, city, borough, township, school district or other municipality, or incorporated district, except as herein provided, shall never exceed seven per centum upon the assessed value of the taxable property therein, nor shall any such municipality or district incur any new debt, or increase its indebtedness to an amount exceeding two per centum upon such assessed valuation of property, without the assent of the electors thereof at a public election in such manner as shall be provided by law.” .The Act of April 20, 1874, P. L. 65, was passed for the purpose of giving force and effect to this provision of the constitution. It provides in substance that the corporate authorities may by a vote duly recorded upon the minutes authorize and direct the increase of indebtedness to an amount in the aggregate not exceeding two per centum upon the assessed value of the taxable property therein “as fixed and determined by the last preceding assessed valuation thereof.” In the present proceeding what constitutes “the last preceding assessed valuation” is a controverted question. It is contended for the plaintiff that the assessment made in 1908, as finally adjusted in 1909, is the valuation to be taken as the basis for computing the two per centum, while for the defendants it is argued that the assessment made by the assessors in 1909, as revised by the board of revision and certified to the1 receiver of taxes on or before February 1, 1910, is the “last preceding assessed valuation” upon which to compute the limit of indebtedness. We have concluded that the contention of the city in this respect must be sustained. A brief discussion of the requirements of the law and the manner of making assessments and revising valuations will be helpful to a proper understanding of the question involved. All assessments are made by the local assessors in the first instance. This is the first step taken in fixing the valuation for the purpose of taxation. It is the foundation upon which all valuations depend. It is even more than a foundation because if the assessment as returned by the assessors be not modified or corrected as provided by law it becomes the assessed valuation upon which the tax rate is levied. The board of revision exercises certain supervisory powers of statutory origin. These powers, however, are no greater than the legislature gave. The duties of assessors and of the board of revision are all prescribed by statute, and when these duties have been performed at the time or times and in the manner thus prescribed the assessment is complete and the valuation fixed for the purpose of taxation. In its general features the system of taxation in the city of Philadelphia is much the same as in other counties of the commonwealth. It is true that in the city of Philadelphia the courts appoint the members of the board of revision, while in the counties the county commissioners by virtue of their office become a board of revision with certain defined duties as members of such board, but they exercise the same supervisory powers and are clothed with practically the same general authority. In the city the board of revision appoints the local assessors while in other counties they are elected by direct vote by the people, but they exercise the same general powers in making assessments and fixing valuations. It is essential, and the legislature so regarded it, to fix certain periods in which the assessors shall perform their duties, and a certain definite time in which to make their returns. The board of revision cannot act until the returns are so made, and then only in the manner and for the purpose prescribed by law. It sits as a board of review after due public notice to hear and determine the complaints of taxpayers, who may feel aggrieved by the valuations placed upon their properties by the assessors, and for the purpose of revising the assessment in order to equalize as nearly as may be the valuations returned by the assessors. Any taxpayer who may feel aggrieved by the action of the board of revision has the right of appeal to the court of common pleas. This makes a complete system, but it is apparent that in order to make it practically effective year by year there must be certain fixed periods in which the assessors shall perform their duties, the board of revision do its work and a limited time in which to take an appeal, else there could be no fixed definite valuation upon which to make the tax levy. The legislature recognized this necessity and fixed certain times or periods for the performance of all these duties. The Act of May 13, 1856, P. L. 567, provides that the books for assessment shall be furnished to the assessors not later than May 15 each year, and by them returned to the board of revision with the assessments complete by August 15, following, and failure to comply with this requirement works a forfeiture of compensation. Section 7 of the same act provides that the board of revision shall commence the discharge of its duties on the first Monday of September in each year, taking into consideration each assessment, and shall complete the work of revision within six weeks, and it further provides that the board shall commence the hearing of appeals on the third Monday of October and proceed to hear the taxpayers of the several wards in succession until the same is closed, not exceeding six weeks. The legislature clearly had in contemplation that the board of revision should proceed promptly to revise the assessments and to dispose of appeals when taken, and six weeks for each branch of this work, twelve weeks in all, were considered sufficient. It may be that increase in population and the extension of territorial limits which necessarily involve more work for the board make it difficult to complete the performance of all these duties in the time fixed by the act of 1856, but there can be no doubt that it was the intention of the legislature to have the assessments complete and the valuations of assessed properties definitely fixed when the duplicates are placed in the hands of the receiver of taxes for collection. As we are informed by this record the board of revision considers the assessment completed on January 31, following the returns by the assessors in the preceding year. The duplicates should then be in the office of the receiver of taxes, and on February 1 the books are opened for the payment of taxes. The board of revision should have its work completed by that time, and we do not see any escape from the conclusion that when the assessors have completed their assessments and made their returns, and the board of revision during the months following has revised the assessment and disposed of the appeals and caused the duplicates to be prepared and certified to the receiver of taxes, the valuation thus fixed is the one contemplated by the constitution for the purpose of determining the amount of indebtedness that may be incurred. No authority has been called to our attention giving the board of revision equitable supervision over the assessments after the duplicates are in the hands of the receiver of taxes for collection, and we think it is a practice that should not be encouraged, although on the face of the record here presented we do not feel warranted in finally disposing of the question. To say the least, however, the practice rests on doubtful authority and certainly must lead to confusion. It would be much better to have the assessment completed and the valuation finally adjusted when the duplicates are made out and placed in the hands of the receiver of taxes, otherwise there can be no fixed valuation and as a result the exact revenues of the city cannot be counted on with any degree of certainty. We are not familiar with any such practice in other counties of the commonwealth. However this may be, we now hold that the "last preceding assessed valuation” for the year 1910, was the one contained in the duplicates, certified by the board of revision to the receiver of taxes and in his hands for collection on February 1, of the present year. The amount of this assessment as shown by the record is $1,437,927,764.

If anything more need be said in support of this position, it may be found by reference to the provisions of the law and the decisions of the courts relating to assessments and valuations of property for purposes of taxation. The board of revision has no power to make a valuation of property for assessment except when the assessors have omitted to make it: Williamson’s Est., 153 Pa. 508. If an owner feels aggrieved by the valuation of his property by the assessor, his proper course is to appeal to the board of revision and this applies to the correction of all errors: Phila. v. Thurlow, 39 W. N. C. 412. The Act of April 1, 1836, P. L. 436, provides that any freeholder of the city of Philadelphia shall have the right of appeal from the assessment fixed by the county commissioners, now the board of revision, if taken within thirty days from the time therein prescribed. After the lapse of thirty days the aggrieved party is without remedy: James v. Bucks County, 13 Pa. 72. Again, under the Act of March 14, 1865, P. L. 320, which gave the right of appeal from the board of revision to the court of common pleas, it was held that the appeal must be taken within the time prescribed by law or it would be too late: City v. Michener, 7 W. N. C. 558. By the Act of March 24, 1909, P. L. 76, it is provided that the books of the receiver of taxes shall be opened and the payment of taxes commence on February 1, each year. This act amended the act of 1895, which was an amendment to the act of 1879, and provided for the change of date for opening books for the collection of taxes. All of these provisions clearly indicate the legislative intention to require all of the preliminary steps in the valuation of property to be taken so that the assessment shall be complete when the duplicates are certified to the receiver of taxes on or before February 1. We can find no authority and none has been called to our attention by the learned counsel in this case, to support the theory that the assessment is not complete until the end of the year for which the taxes are levied. This contention is at variance with the practice in all other counties of the commonwealth and as it seems to us cannot be sustained without impairing the efficiency of our system of taxation. But it is argued that the assessment for the year 1910 was not in point of fact completed when the duplicates were placed in the hands of the receiver of taxes for collection. While this argument is plausible it is unsound. What the law requires cannot be disregarded because there may have been failure to observe it. It is difficult to see upon what theory the receiver of taxes is authorized to collect definite fixed taxes as shown by the duplicates, if the assessments had not been completed and the valuations of the properties finally determined. The valuation of the property is absolutely necessary as a basis upon which to levy the tax and determine the amount thereof. All of these things are presumed to have been done, and in contemplation of law have been done, when the board of revision certifies the duplicates to the receiver of taxes for collection.

It is contended for the city that personal securities taxed as “money at interest” should be included in the assessed value of the “property therein” in fixing the basis for determining the amount of indebtedness that may be incurred. This raises the question whether this tax is for city or state purposes. It is true that the city or county does receive as a gratuity from the state three-fourths of the tax on personal securities held by residents of the city of Philadelphia and as such subject to taxation. But it is a state and not a city or county tax. The character of the tax is determined by the act which authorizes its imposition, and not by the use made of the revenue thus derived. Personal securities of this character were taxed for state purposes under the act of 1879, which has been amended by the acts of 1889, 1891, and other supplementary legislation. This tax was authorized to be imposed and collected for state purposes. The acts themselves in express language so provide, and there can be no doubt about it. The act of 1891, which in this respect uses the same language as the former acts, provides as to this class of property, that it “is hereby made taxable annually for state purposes at the rate of four mills on each dollar of the value thereof.” This fixes the character of the tax and designates the purpose for which it is imposed. It is true the .commonwealth, as a matter of public policy, voiced by the legislature, returns a large part of it .to the counties. But it is collected by the state, paid into the state treasury and returned to the counties by the officers of the commonwealth as authorized by the statute. Under these circumstances this cannot be treated as a city or county tax, and the personal securities upon which the tax is levied cannot be considered as property taxable for city purposes within the meaning of the constitution.

It is contended for the plaintiff that in addition to the funded indebtedness of the city, there are certain items of unfunded or floating debt which must be treated as an existing indebtedness in determining the borrowing capacity of the city. The principal item claimed as an existing indebtedness under this head arises out of the failure of the city to appropriate for school purposes as much money as it is claimed the act of 1905 requires. It is urged that a legal obligation rests upon the city to appropriate the full amount of money required by that act, and that any deficiency from year to year creates an indebtedness which can be enforced by the board of education when it chooses to do so. Section 9 of this act requires councils of a city of the first class to annually appropriate for school purposes a sum not less than five mills “on each dollar of the total' assessment of real property of said school district.” The practical difficulty is that councils must act before the assessments are revised and completed and this of necessity requires the appropriation to be made upon estimates furnished by the controller who acts in matters pertaining to schools upon requisitions made by the board of education. The appropriation being thus made upon an estimate furnished by the controller is never in the exact amount which upon a completed valuation may be shown to be required, but it is the nearest approach to it possible with the information at hand when it is made and it is the method recognized by law for the purpose stated. The Act of June 11, 1879, P. L. 130, requires the controller to report to councils not later than September l, an estimate of the receipts and expenditures for the succeeding calendar year. This statement must of necessity include an estimate of the total assessment for that year, otherwise it would be impossible to determine with any degree of accuracy the amount of taxes to be received at any given rate of taxation. With these estimates before them councils are required not later than October 1, to fix the tax rate for the succeeding year. It is apparent that the tax rate is necessarily fixed upon the estimates furnished by the controller, but these estimates are made under authority of law and do not represent the arbitrary acts of the controller. They furnish the basis of taxation and set in motion the machinery for providing the necessary revenues and making appropriations with which to meet the expenses of the various departments of the city government and school district for the succeeding year. The controller’s estimate of the total assessment may be more or it may be less than the amount which the completed valuation may show. If it should turn out to be more the school district would then receive a greater amount than the minimum fixed by the act of 1905; if less, it would not receive the full amount to which it might be entitled. If more were appropriated than the act requires no one would contend that the city might recover the excess amount so appropriated, and if less is appropriated we do not see upon what theory a fixed indebtedness against the city is thus created. It should be borne in mind in this connection that the appropriation is made upon information contained in the budget furnished by the board of education showing its requirements for the succeeding year, and it must be assumed not only that the necessities of the school district but the total valuation and the amount of revenue to be derived for this purpose are taken into consideration by the school authorities in making up the budget. The expenditures of the school district are estimated on this basis and the schools are maintained out of the appropriation so made. The school system is supported during the year out of the moneys thus set apart and the accounts are annually audited and finally settled. Under these circumstances we can see no virtue in the claim that the school district still has an existing indebtedness against the city for any deficiency which may subsequently appear to exist by reason of not having estimated the total amount of the assessment accurately. The most that can be said of the act of 1905 is that if the estimate of thé controller is not as large as the completed assessment may show it ought to be, and the board of education representing the school district deems it advisable to make further requisition to meet the expenses of that year, it may enforce its demand to the amount required to be appropriated by that act. If, however, the board of education accepts the amount appropriated by councils upon the estimate of the controller, maintains the school system out of this appropriation and settles its accounts with the city for the school year upon this basis, it has no further claim for an alleged deficiency. Again, it may be noted that the school authorities make no such demand and do not claim a deficiency or an existing indebtedness of the kind here set up. In this view of the law the contention that these deficiencies for several years create an existing indebtedness against the city cannot be sustained.

The city contends that it is entitled to certain deductions from the gross indebtedness in ascertaining the net indebtedness under the act of 1874. The fifth section of the act provides in substance that the word “indebtedness” shall include all manner of debt, floating as well as funded, and that the net amount thereof “shall be ascertained by deducting from the gross amount thereof, the moneys in the treasury, all outstanding solvent debts, and all revenues applicable within one year to the payment of the same.” This act was passed at the first session of the legislature after the adoption of the new constitution and was intended to give force and effect to the constitutional requirements as to municipal indebtedness. It was in effect a contemporaneous legislative construction of the constitutional provisions relating to this subject. The validity of this act has to all intents and purposes remained unchallenged for thirty-six years. Municipalities have acted upon its authority from the date of its approval to the present time. Indebtedness has been created, loans have been made and bonds issued upon the strength of it during all these years. Nothing but imperative necessity would justify a court, after the lapse of so many years and in view of the fact that a large amount of indebtedness has been created on the faith of it, in now holding that it is in conflict with the constitution. We see no such imperative necessity, but on the other hand it seems to us that the method provided for ascertaining the net indebtedness of municipalities by this act is both reasonable and sensible. This is especially true because both funded and floating indebtedness is included in the gross amount, and it is certainly not unreasonable to deduct from this gross sum those assets of the city available for the liquidation of outstanding obligations. This is what the act contemplates, and no reasonable construction placed upon, the constitutional limitations conflicts with the power of the legislature to so provide. Of course, the municipal authorities cannot arbitrarily say that every claim of the city is an outstanding solvent debt, or that revenues necessary to pay current expenses could be set apart for this purpose, but where there are bona fide outstanding debts due the city, and revenues not necessary to meet current expenses are available for the payment of indebtedness within the year, such deductions can be made under the provisions of the act in ascertaining the net indebtedness. The facts presented by this record are too meager to warrant a finding as to each item claimed as a deduction by the city, and for the purposes of this case we do not deem it necessary to discuss in detail the items of deduction claimed. Under the general principle stated the city is clearly entitled to a deduction for several of the items claimed, and it may be that upon a full presentation of all the facts some of the items would not be allowed, but without regard to what items would be allowed and what items might not be, the borrowing capacity of the city has not been exhausted and the loan in question is clearly within the limit.

The contentions that the city is without authority to make the loan for the purposes stated, and that the purposes set out in the ordinance are not sufficiently specific, we think cannot be sustained. As to loans for temporary or other purposes the statutes do not provide for a definite statement of purpose as is required to give notice to the public by the act authorizing a loan only upon direct vote of the people. The practice always has been, however, as it ought to be, to set out in the ordinance the purpose or purposes for which the indebtedness is to be incurred, even when the loan is for temporary purposes, and this was done in the present case. The moneys cannot be used for any purpose other than stated in each item contained in the ordinance, and if the municipal authorities should attempt to divert the moneys thus provided to any other purpose they would be enjoined from so doing. If, however, the moneys to the amount specified in each item of the ordinance are used for the specific purpose stated, nothing contained in any of the statutes relating to this, character of loan denies the right of the municipality through its proper authorities to so provide. There is no suggestion in the record that any attempt will be made to divert the proceeds of the loan to any purpose other than that provided in the ordinance, and if any such attempt should be made the municipal authorities would subject themselves to the penalties provided for so doing and could be enjoined by any taxpayer or other party in interest.

Many other questions have been raised, but we deem it unnecessary to discuss them in detail for the purposes of this case. Enough has been said to demonstrate that the city has not reached the limit of its borrowing capacity under the constitution. We therefore hold that the loan in question in the present case is within the borrowing capacity of the city and that the municipal officers under the facts presented by this record cannot be enjoined from proceeding to negotiate it as authorized by the ordinance.

Bill dismissed at cost of plaintiff.


source: Caselaw Access Project

author: Mr. Justice Elkin,

license: Public Domain

text:
    Commonwealth, Appellant, v. Filbert Paving & Construction Company.

      Corporations — Manufacturing companies — Exemption for capital stock tax — Act of June 8, 1898, P. L. 898.

    1. The holding of a foreign charter does not take a manufacturing corporation out of the class exempted from the payment of capital stock taxes.
    2. A paving and construction company, incorporated to do a manufacturing business, and engaged in the business of manufacturing cement floors, asphalt floors, pavements, roadways and structural concrete, is primarily engaged in a manufacturing business within the purview of the act of June 8, 1893, and is entitled to exemption from payment of capital stock taxes. If any part of its capital is not so employed the burden is on the commonwealth to show what part and how much of its capital is not so employed in order to fix a valuation for the purposes of taxation.
    3. While the purpose stated in the charter of a corporation is not conclusive of the nature and character of the business to be transacted, it does primarily indicate the purpose for which the corporation is created, and the burden rests upon those who challenge the primary purpose stated in the certificate of incorporation to show that it is something different.

      Argued May 23, 1910.
    Appeal, No. 9, May T., 1909, by plaintiff, from judgment of C. P. Dauphin Co., Commonwealth Docket, 1907, No. 184, in favor of defendant in case of Commonwealth of Pennsylvania v. Filbert Paving & Construction Company.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Affirmed.
    Appeal by defendant from account settled by auditor-general and state treasurer for tax on capital stock. Before McCarrell, J.
    From the record it appeared that the Filbert Paving & Construction Company was a corporation of the state of Delaware engaged in business in the state of Pennsylvania. It was engaged in the business of manufacturing cement floors, asphalt floors, pavements, roadways, and structural concrete from cement, sand, crushed stone, cinder, asphaltum, asphalt mastic, bitumen, silica grit, carbonate of lime, petroleum residuum, and various coloring materials as authorized by its charter.

      Errors assigned were (3) in reaching the first conclusion of law as follows: “The defendant company is in fact and law a corporation of another state, organized under the laws thereof for manufacturing purposes with all of its capital stock, except $10,800, invested in and actually and exclusively employed in carrying on manufacturing in this state, and is therefore entitled to exemption from any capital stock tax on the capital stock thus invested and employed;” and (5) in directing judgment for defendant.

      William M. Hargest, assistant deputy attorney general, with him J. E. B. Cunningham, deputy attorney general, and M. Hampton Todd, attorney general, for commonwealth, appellant.
    Defendant is not in the legislative class of manufacturing companies: Com. v. Light & Power Co., 145 Pa. 105; Com. v. Keystone Electric Light, etc., Co., 193 Pa. 245; Com. v. Marsh, 3 Pa. Dist. Rep. 489; People v. Dry Dock Co., 63 How. Prac. 451; 92 N. Y. 487.
    July 1, 1910:
    A grant of exemption from taxation, being in the nature of a renunciation of sovereignty, must invariably be construed most strictly against grantee: Bank of Penna. v. Com., 19 Pa. 144; Jones & Nimick Mfg. Co. v. Com., 69 Pa. 137.

      Hampton L. Carson and M. E. Olmsted, with them A. C. Stamm and John Kent Kane, for appellee.
    The court found as a fact that defendant was engaged in “manufacturing,” and under the definitions no other conclusion was possible: Com. v. Light & Power Co., 145 Pa. 105; People v. Ice Co., 99 N. Y. 181; Murphy v. Arnson, 96 U. S. 131; Re Niagara Contracting Co., 127 Fed. Repr. 782; Com. v. Allegheny Gas Co., 1 Dauph. 93; Com. v. Keystone Bridge Co., 156 Pa. 500.
   Opinion by

Mr. Justice Elkin,

The appellee was incorporated in the state of Delaware as a manufacturing company. Its property and assets are all located in the state of Pennsylvania where its principal business is transacted. The commonwealth through its accounting officers made a tax settlement upon its capital stock and insists upon the payment of the same. The learned court below held that it is a manufacturing company and as such is entitled to the exemption provided by our statutes. It is argued for the commonwealth that the appellee company is not within the class of manufacturing corporations intended to be exempted from the payment of capital stock taxes, and in support of this contention it is suggested that the holding of a foreign charter places it in a class not included in our exemption statutes. This position is without force and cannot be sustained. It is not an open question in Pennsylvania. It was settled adversely to the commonwealth then and now in Com. v. American Car, etc., Co., 203 Pa. 302. That case was affirmed on the opinion of the court below which exhaustively considered the question and covered the ground so completely as to leave nothing of value to be added to the discussion.

Again, it is argued, that even if this company had been incorporated in our own state, it could not be considered as a manufacturing company within the meaning of our exemption laws. The latest act relating to this subject is that of 1893, which provides that the capital stock of a manufacturing corporation shall not be subject to the payment of a capital stock tax upon that portion of its capital “invested in and actually and exclusively employed in carrying on manufacturing within the state.” The only companies expressly excepted from the exempted class by this act are those which enjoy the right of eminent domain, and those engaged in brewing or distilling liquors. The appellee does not possess or enjoy the right of eminent domain, nor is it engaged in the brewing or distilling business, and is not therefore within the class or classes of corporations to which by the express provisions of the statute the exemption does not apply. Nor do we think there is any other sufficient reason why this company is not entitled to the benefits of our exemption laws as a manufacturing corporation. It was incorporated for manufacturing purposes and has the prima facie right under its charter to do a manufacturing business. While the purpose stated in the charter is not conclusive of the nature and character of the business to be transacted, it does primarily indicate the purpose for which the corporation is created. Of course it may be made to appear either in point of fact or as a matter of law that a company so incorporated is not what it purports to be, but the burden rests upon those who challenge the primary purpose stated in the certificate of incorporation to show that it is something different. In the present case this burden has not been met. It was tried in the court below without a jury under the act of 1874, and the findings of fact as well as the conclusions of law aro all at variance with the contention of the commonwealth. The case was heard on depositions, no oral testimony having been introduced, and upon the facts thus established the learned court below based its findings and conclusions. A careful examination of this record has failed to convince us of any reversible error either as to the findings of fact or conclusions of law by the learned court below. The annual report filed in the office of the auditor general, where under the law it is required to be filed, shows that the appellee company had no capital employed or invested in this state in real estate, or personal property, or money on deposit bearing interest, other than was actually employed in its manufacturing business, except as to a certain item mentioned. The deposition submitted at the hearing upon which both sides rely specifically states that “the defendant company had all of its assets, wholly and exclusively employed in its manufacturing business as aforesaid within the state of Pennsylvania, except $10,800, invested in the coal business.” Judgment was entered in the court below for the taxes upon that portion of its capital invested in the coal business and therefore the commonwealth has nothing about which to complain as to the tax on this item. It is conceded that the appellee has a plant, real estate, machinery and appliances used in the manufacture of its products, and it must be conceded that all of the capital so invested is employed in the manufacturing business. It may be difficult to define with legal exactness just what part of a business may be considered manufacturing and what part may not. So far as this record discloses all of the capital of the company invested in Pennsylvania except the item above mentioned is employed in the manufacturing business. The annual report so states and the deposition so avers, and there is no testimony to the contrary. Under these circumstances there is no foundation upon which to base the contention that the appellee is not entitled to the exemption. Upon the general proposition as to what constitutes a manufacturing business it may be said that our courts have held that making brick, burning coal into coke, tanning hides and producing leather, and the assembling of parts and the erection of bridges by the use of structural steel are manufacturing processes. As to bridges, see Com. v. Keystone Bridge Co., 156 Pa. 500, and Com. v. Pittsburg Bridge Co., 156 Pa. 507. In all such cases the proper rule is to include in the exempted capital the value of the plants, property, machinery and appliances incidental and necessary to complete the manufactured product. We all agree that the appellee company was incorporated to do a manufacturing business, and in point of fact is primarily so engaged. If any part of its capital is not so employed, the burden was on the commonwealth to show what part and how much of its capital was not so employed in order to fix a basis of valuation for the purpose of taxation. This may be done by means of the report filed by the company, and if this be not satisfactory, then by any other evidence obtainable for the purpose. No evidence was introduced in the present case upon which to base a finding that any part of the capital except the item of $10,800, was used other than in its manufacturing business. The tax was imposed upon the capital employed in the coal business, and all other capital so far as this record shows was actually used and employed in the manufacturing business.

Judgment affirmed.


author: Mr. Justice Moschzisker,

text:
    York v. York Railways Company, Appellant.

      Street railways — Bond—Municipal corporations — Liquidated damages — Penalty—Noncompletion of road — Delay—Burden of proof— Estoppel.

    1. The question whether the amount stated in a conditional bond or contract is to be taken as a penalty or a liquidation of damages ■ arising from breach of the condition, is to be determined by the intention of the parties, drawn from the words of the whole contract, examined in the light of its subject-matter and its surroundings, and in this examination it is necessary to consider the relation which the sum bears to the extent of the injury which may be caused by the several breaches provided against, the ease or difficulty of measuring a breach in damages and such other matters as are legally or necessarily inherent in the transaction.
    2. The whole sum named to stand as security generally may by express contractual stipulation be made collectible as liquidated damages for a particular designated breach provided the damages flowing from such breach would obviously be impossible or most difficult to ascertain by reference to any exact pecuniary standard of measurement.
    3. Where a street railroad company agrees, in accordance with the terms of a city ordinance, to commence the construction of a street railway by a certain date and to complete and operate same as an entirety upon all the streets named in the ordinance within a stipulated time, and furnishes a bond for $25,000, conditioned to comply with the ordinance and to indemnify the city from loss or damage arising from breach, and agreeing “that the said bond shall become forfeited to and collectible by the city as assessed and liquidated damages due and owing said city in event of failure of the company to complete and operate its line of railway within the time stated; for which bond, after the company shall have completed and begun to operate its railway line shall be substituted the bond of the company in the sum of $5,000,” the city is entitled to collect $25,000 on the bond, as liquidated damages in case of failure to complete and operate the railway within the stipulated time.
    4. In such case, if the railway company desires to plead an excuse for its failure to complete and operate its line within the time limit, the burden is upon it to show that the matter relied upon actually caused or contributed to its failure. A temporary delay, from no matter what source, would not serve to relieve the company from its contractual obligations, if, as a matter of fact, it did not cause or contribute to the ultimate failure to comply with the ordinance.
    5. In such case, the fact that the city stood by and saw work done on the line after the expiration of the time limit, required the company to expend money in paving a street, and accepted a percentage of the gross earnings on the tracks laid as stipulated in the ordinance, does not estop the city from collecting the amount stipulated as liquidated damages for default in not completing and operating the line on time, there being nothing upon the record to show that the city claimed a forfeiture of the franchise or raised any question as to the right of the company to use the part of the line that it had completed and was paying the percentage upon.

      Argued May 23, 1910.
    Appeal, No. 144, Jan. T., 1910, by defendant, from judgment of C. P. York Co., Aug. Term, 1909, No. 156, on verdict for plaintiff in case of City of York v. York Railways Company.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Affirmed.
    Assumpsit on a bond. Before Bittenger, P. J.
    The facts appear in the opinion of the Supreme Court.

      Errors assigned among others wei-e (2) rejection of evidence of quo warranto proceedings instituted by attorney general; (4) rejection of evidence that city authorities compelled defendant to take up a curve and remove certain tracks; (5) rejection of evidence of notice and direction to pave streets actually occupied; (6) rejection of evidence that city demanded and accepted three per cent of gross earnings of line actually in operation; (7) in directing a verdict for plaintiff.

      W. F. Bay Stewart and John G. Johnson, with them John A. Hoober and George S. Schmidt, for appellant.
    Where the agreement contains several matters of different degrees of importance and yet the sum named is payable for the breach of any, even the least, it is to be construed as a penalty and not as liquidated damages: Steeper v. Williams, 48 Pa. 450; Shreve v. Brereton, 51. Pa. 175; March v. Allabough, 103 Pa. 335; Keck v. Bieber, 148 Pa. 645; Stafford v. Walker, 12 S. & R. 190; Lehigh. Coal & Nav. Co. v. Early, 162 Pa. 338.

      J. S. Black, with him V. K. Keesey and John L. Rouse, for appellee.
    It will be inferred that parties intended a sum agreed to be paid upon breach of a contract as liquidated damages whenever the damages are uncertain and not capable of being ascertained by any satisfactory rule: Malone v. Phila., 147 Pa. 416; Emery v. Boyle, 200 Pa. 249.

      July 1, 1910:
   Opinion by

Mr. Justice Moschzisker,

This action was brought by the city of York against the York Railways Company, successor to the Colonial Street Railway Company, and the Fidelity & Deposit Company of Maryland, to recover $25,000 liquidated damages, under a contract evidenced by an ordinance of councils granting a franchise to construct and operate a railway upon certain of the highways and bridges of the city of York, an acceptance of the ordinance, and a bond given under its provisions with the last-named defendant as surety. The court below instructed a verdict in favor of the plaintiff for the full amount of the bond with interest, and the defendants have appealed.

The ordinance was passed finally by councils March 2, 1906, approved by the mayor March 20, 1906, accepted by the railway company March 27, 1906, the bond given and accepted on March 30, 1906, and work commenced April 1, 1906. The breach relied upon was the failure to complete and put the whole line in actual operation within three years from the last date as required by the terms of the ordinance.

The only sections of the ordinance essential to our present consideration are the ninth and thirteenth, and the material parts of these are: "Sec. 9. The company in good faith shall commence the construction of its line prior to April 1, 1906, and shall complete the construction of its line upon all the streets and between all the points above mentioned and put same in actual operation within three years from said date and on its failure so to commence, or having commenced, on its failure to complete its line, its right to occupy the portion of any street or streets on which its line shall not have been completed at the time fixed for the completion of the same, shall terminate and end, except as hereinafter provided, unless the completion of the construction of its said line of railway at the existing City grades for said streets, avenues, bridges or highways at the time of the construction shall be delayed or rendered impossible by proceedings either at law or in equity to invalidate its charter or to prevent the construction or completion of its line of railway upon the streets, avenues, bridges and highways, or a’ny of them, mentioned in section 1 hereof . . . and “Sec. 13. The Colonial Street Railway Company, . . . . shall .... accept all the obligations, conditions and duties by this ordinance imposed upon said company .... the certificate (of acceptance) and this ordinance to constitute a contract, between the said Colonial Street Railway Company and the City of York. Said Company shall also at the same time of filing said certificate furnish a bond in the sum of Twenty-five thousand dollars .... conditioned to faithfully comply with all the provisions of this ordinance and to indemnify the City of York of and from all loss and damage accruing to it in any way by reason of the passage of this ordinance, .... the said Company, its successors and assigns, also agrees that the said bond shall become forfeited to and collectible by the City of York as assessed and liquidated damages due and owing said city in the event of the failure of said Company, its successors and assigns, to complete and operate its line of railway as set forth in section 9 hereof; for which bond, after the Company shall have completed and begun to operate its railway line, shall be substituted the bond of the company in the sum of $5,000. . . .”

The condition of the bond is: “If the above bounden, the Colonial Street Railway Company, shall faithfully comply with all the provisions of a certain ordinance .... entitled ‘An Ordinance granting to the Colonial Street Railway Company, its successors and assigns, the right to' construct, operate and maintain its line or lines of street railway over, and along certain streets, bridges, avenues and highways in the City of York, under certain conditions and restrictions/ approved by the mayor of the said City of York on March 20, 1906, and shall indemnify the City of York of and from all loss and damage accruing to it in any way by reason of the passage of the above-recited ordinance, then this obligation to be void; otherwise to be and remain in full force and virtue.”

The defendants contend that the court below erred in treating the sum of the bond as liquidated damages. They argue (a) the presumption to be that a lump sum named by the parties to a contract is a penalty rather than liquidated damages; and (b) where an agreement contains several matters of different degrees of importance and yet the sum named is payable for the breach of any, even the least, it is to be construed as a penalty and not as liquidated damages. Neither of these principles governs the present case.

(a) “The question whether the amount stated in a conditional bond or contract is to be taken as a penalty or a liquidation of damages arising from a breach of the condition, is to be determined by the. intention of the parties, drawn from the words of the whole contract, examined in the light of its subject-matter, and its surroundings; and in this examination we must consider the relation which the sum stipulated bears to the extent of the injury which may be caused by the several breaches provided against, the ease or difficulty of measuring a breach in damages, and such other matters as are legally or necessarily inherent in the transaction:” March v. Allabough, 103 Pa. 335. “The difficulty of measuring the damages which would result from a breach of contract is always an important element, even a controlling one, in determining whether the intention of the parties was to fix a sum certain as the just amount to be recovered instead of leaving the question to the uncertain estimate of the jury. Generally where the covenant is for the performance or non-performance of a single act or of several acts, damages for the breach of which cannot be measured by any fixed standard, the sum named if reasonable in amount will be considered as liquidated damages:” Emery v. Boyle, 200 Pa. 249. “It is competent for the parties by mutual agreement to settle the amount of the damages that are in their nature uncertain and difficult of estimation, where they depend upon the failure to perform a single act:” Shreve v. Brereton, 51 Pa. 175. Here the action was to recover on the single ground that the appellant railway company had failed to complete and operate its line within the time required by the ordinance. That the completion and operation of the line within the limited period was the most important thing that the parties had in mind is made apparent by the agreement that after such completion the city was to accept a bond of $5,000 in substitution for the bond of $25,000. That the last-named sum was intended as liquidated damages to cover the loss which the city would sustain in the event of the company’s failure to complete and operate its line within the stipulated time is made plain by the words of the ordinance: “The said company, its successors and assigns, also agrees that said bond shall become forfeited to and collectible by the city of York as assessed and liquidated damages due and owing said city in the event of the failure of said company, its successors and assigns, to complete and operate its line of railway. . . .” This was the only breach for which the ordinance provided that the sum named in the bond should be considered as liquidated damages, and clearly it was one where the difficulty of measuring the damages would be insurmountable; such is always the case where the object is to give compensation for public inconvenience: Malone v. Phila., 147 Pa. 416.

(b) Although the second principle relied upon by the defendants has met with recognition in Pennsylvania (March v. Allabough, supra), there is nothing in it which forbids an express contractual stipulation that the whole sum named to stand as security generally, shall be collectible as liquidated damages for a particular, designated breach; provided the contemplated breach is of such a nature that the damages flowing from it would obviously be impossible or most difficult to ascertain by reference to any exact pecuniary standard of measurement, as in the present case.

The defendants further contend that notwithstanding the fact that the holder of the franchise “did not complete the construction of its line upon all the streets and between all the points” mentioned in the ordinance “or put same in actual operation within three years,” the plaintiff was not in a position to insist upon a strict compliance with the requirements of the ordinance in these respects: (1) because quo warranto proceedings were instituted against the franchise holder by the Attorney General; (2) because the plaintiff itself hindered and delayed the construction of the line; (3) because the plaintiff is estopped from claiming under the bond by reason of standing by and seeing work done on the line, notifying the railroad company to expend money in paving a certain street, and demanding and receiving a percentage on the gross earnings of the company after the expiration of the three-year limit.

1. The quo warranto proceedings had been instituted at least one day prior to the approval of the ordinance by the mayor and eight days prior to its acceptance by the railway company, and the work on the line was commenced after their inception; hence it cannot with any show of reason be contended that the contracting parties considered the mere pendency of these proceedings as delaying or rendering impossible the completion of the line as required by the ordinance. They were instituted March 19, 1906, and withdrawn October 8, 1906, and there wa,s no proper offer to show that there had been any actual stoppage of the work by reason of their pendency during this short period. If the railway company desired to plead an excuse for its failure to complete and operate its line within the time limit, the burden was upon it to show that the matter relied upon actually caused or contributed to its failure. A temporary delay,- from no matter what source, would not serve to relieve the company from its contractual obligations, if as a matter of fact it did not cause or contribute to the ultimate failure to comply with the ordinance, and whether it did or not was peculiarly within the knowledge of the defendant company.

2. Counsel for the defendant railway offered to show that in December, 1907, the mayor and highway committee of the city of York compelled it to take up a curve connecting a line which it had constructed on West King street with a line on Richland avenue, and ordered it to remove its track from the former street, “this for the purpose of showing that the plaintiff itself hindered, delayed, and prevented the defendant from constructing its line of railway in accordance with the terms of the ordinance.” The overruling of this offer is assigned for error. We find no express provision in the ordinance for a curve to connect the lines in question, so it is not clear how any action of the city in relation to that curve could be viewed as a prevention or delay of the work of construction required by the ordinance. However, if the company had the right to lay the curve, neither the mayor nor the highway committee could change the terms of the ordinance, and the mere receipt by the company of a direction from them to do a thing contrary to the terms of the ordinance would not justify any delay on its part in the work of construction; and, again, there is nothing in the offer to show that the delay caused by taking up the curve was more than temporary. As to the notice to remove the track on King street, there is nothing in the offer to prove that the company was required to or ever did take it up; the offer was merely to show that the company was directed so to do. We see no merit in this assignment.

3. The defendant company constructed a double track line on one of the streets covered by the ordinance in May, 1909, and it offered to show that under the direction of the highway committee of the city it had paved this street at an expense of $1,000, and that in June, 1909, it paid to the city three per cent of the gross earnings made upon this piece of track, “for the purpose of showing that the city is estopped by both of these facts from claiming a forfeiture of the ordinance or a recovery-in this suit.” The trial judge disallowed the offer, but for our present purposes we will treat the matter as though the testimony had been received. The appellants argue that the city stood by and saw work done on the line after the expiration of the three years, required the company to expend money in paving a street, and accepted the percentage stipulated for in the ordinance; therefore it is estopped from a recovery in this suit. This line of reasoning is difficult to understand. The ordinance provides that each year from its date the company shall pay to the city three per centum of its entire gross receipts in full satisfaction of all license taxes, pole taxes, taxes on cars, and other financial returns. We find nothing upon the record to show that the city claimed a forfeiture of the franchise or raised any question as to the right of the company to use the part of the line that it had completed and was paying the percentage upon. The question tried was not whether the company had forfeited any right or privilege given to it by the contract with the city, but simply whether or not its failure to complete its whole line within the three years entitled the city to collect the amount stipulated as liquidated damages for that particular default. The appellant agreed to construct its railway as an entirety upon all the streets named in the ordinance and to put it in operation within a stipulated time, or to pay $25,000 liquidated damages in case of failure so to do. The evidence shows that it has constructed but a small part of the line, and there is nothing upon the record to show an effort or even an intention to complete the rest. Under these circumstances the damages were properly due and recoverable.

While we do not agree in every instance with the reasons given by the trial judge in making his rulings upon the evidence, we fail to find any reversible error upon the record. The assignments of error are all overruled and the judgment is affirmed.


author: Per Curiam,

text:
    Commonwealth v. Clairton Steel Company, Appellant.

      Corporations — Bonds — State banks or savings institutions — Exemption from taxation — Acts of June 8, 1891, P. L. 229, June 80, 1885, P. L. 193, and July 15, 1897, P. L. 292.

    A corporation, certain of whose bonds are held by a state savings bank, is itself liable for the four mills tax thereon imposed by the Act of June 8, 1891, P. L. 229, where it, the corporation, does not comply with the Act of June 30,1885, P. L. 193, requiring the treasurer of the corporation issuing loans to deduct the tax from the interest payable thereon, and the bank fails to make payment of its capital stock tax within the time required by the Act of July 15, 1897, P. L. 292, to gain exemption from taxation on bonds owned by the bank in its own right, although such payment is made a few days thereafter, and the corporation does not know that the bank has failed to secure the exemption.
    Argued May 23, 1910.
    Appeal, No. 1, May T., 1910, by defendant, from judgment of C. P. Dauphin Co., Commonwealth Docket, 1908, No. 205, for plaintiff in case of Commonwealth v. Clairton Steel Company.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Affirmed.
    Settlement of an account by the auditor general and state treasurer for taxes.
    The facts appear in the following opinion of Kunkel, P. J.:
    This is an appeal from the settlement of an account by the auditor general and state treasurer against the defendant company for tax on its corporate loans for the year 1905. It was tried by the court without the intervention of a jury by agreement of counsel as provided by the act of April 22, 1874.
    The facts, which are not in dispute, we find to be as follows-

      PACTS.
    1. The defendant company is a corporation of the state of Pennsylvania. In the year 1905, it made its report of bonded indebtedness to the auditor general, setting forth therein bonds held by residents of Pennsylvania, nonresidents and corporations. On March 25, 1906, the auditor general and state treasurer setted an account against it for tax of four mills upon $2,760,833 of indebtedness, which, after deducting certain commissions to the defendant’s treasurer, amounted to $10,933.12. The defendant paid $4,400 on account, and duly appealed from the balance of the tax claimed.
    2. The Union Savings Bank is a state bank or savings institution, subject to the provisions of the Act of July 15, 1897, P. L. 292, the first section of which, after providing for the taxation of capital stock or shares of stock of such banks, contains in this proviso:
    “And provided further that in case any bank or savings institution having capital stock, incorporated under the law of this state or of the United States, shall collect annually, from the shareholders thereof said tax of four mills on the dollar upon the actual value of all the shares of stock of said bank or savings institution according to the rule hereinbefore stated that have been subscribed for or issued, and pay the same into the state treasury on or before the first day of March in each year, the shares and so much of the capital and profits of such bank or savings institution as shall not be invested in real estate, shall be exempt from local taxation under the laws of this commonwealth; and such bank or savings institution shall not be required to make any report to the local assessor or county commissioners of its personal property owned by it in its own right for purposes of taxation, and shall not be required to pay any tax thereon.”
    3. On March 2, 1905, the bank forwarded a report to the auditor general, showing the value of its capital stock, or shares, as ascertained in the method directed by the act of 1897, and at the same time gave notice that it had elected to pay the tax of four mills on such valuation. Its report was received by the auditor general on the day following. Upon this valuation the tax was assessed by the auditor general, and the settlement therefor was mailed to the bank and received by it on March 4,1905. On the same day the bank sent its check for the amount of tax which was turned into the state treasury on March 6, 1905.
    4. The Union Savings Bank held and owned in its own right in 1905 $1,261,000 of bonds of the defendant company. Assuming that the bank had paid its capital stock tax in time to obtain the exemption granted by the proviso above quoted, the defendant company paid to the bank the interest in full upon the bonds, making no deduction for any loan tax from the interest. The fact that the bank had not forwarded its capital stock tax before March 4, 1905, was not known to the defendant company until after this appeal had been taken and the interest on the bonds in question had been paid in full.
    5. It was agreed by the parties that the only question in controversy is that of the taxability of the $1,261,000 of bonds issued by the; defendant company and held and owned in 1905 by the Union Savings Bank, and that if the court should find that the defendant company is taxable in respect to these bonds, judgment should be entered against the defendant and in favor of the commonwealth for $5,133.17, but, if not, then for $104.39, only.
    DISCUSSION.
    The Act of June 8, 1891, P. L. 229, imposes a tax of four mills on all corporate loans, and the fourth section of the Act of June 30, 1885, P. L. 193, requires the treasurer of the corporation issuing the loans to deduct the tax from the interest payable thereon. Upon failure or neglect to do so, the corporation itself is liable for the tax: Com. v. Delaware Div. Canal Co., 123 Pa. 594; Com. v. Railway Co., 162 Pa. 614. The defendant company, therefore, was bound to deduct from the interest which it paid on its bonds held by the Union Savings Bank of Pittsburg the tax of four mills on such bonds, unless the bonds were exempt from taxation by the provisions of the Act of July 15, 1897, P. L. 292. By that act exemption from taxation on its bonds owned by it in its own right is given to a state bank or savings institution which shall pay into the state treasury on or before March 1 in each year the tax imposed therein upon the shares of its capital stock: Com. v. Clairton Steel Co., 222 Pa. 293. The language of the proviso granting the exemption as to the time when the stock tax shall be paid is without ambiguity, and, therefore, is not open to construction. The exemption is conditioned upon the payment of the tax on or before March 1, in each year. As we have found, the Union Savings Bank did not comply with this condition. It did not pay the tax on the shares of its stock, or even elect to pay it, until after the statutory time. It was not entitled, therefore, to the exemption, and the bonds of the defendant company held by it remained subject to the loan tax imposed by the act of 1891, and it was the duty of the treasurer of the defendant company to assess the tax and deduct it from the interest which was paid on them. As this was not done, the defendant company became liable for such tax. It is true that the bank paid its stock tax within a few days after the limit of time fixed by the act, and that the defendant company did not know that the bank had failed to secure the exemption from the tax on the bonds. Inquiry on the part of the defendant company, however, would certainly have disclosed that fact. Be that as it may, we are not at liberty to disregard the time fixed by the act of 1897, on or before which the stock tax must be paid in order to obtain exemption, and thus to relieve the defendant company from its liability in the present instance.
    We, therefore, conclude:
    1. That the $1,261,000 of bonds of the defendant company held and owned in its own right by the Union Savings Bank of Pittsburg in the year 1905, were not exempt from the four mills tax imposed by the Act of June 8, 1891, P. L. 229.
    2. That the defendant company, having neglected to deduct the tax for that year from the interest which it paid upon such bonds, is liable for the same.
    3. That the commonwealth is entitled to judgment against the defendant company for the said loan tax.
    Therefore, in accordance with the stipulation of the parties, judgment is directed to be entered in favor of the commonwealth and against the defendant for the sum of $5,133.17, if exceptions be not filed within the time limited by law.

      Error assigned was judgment of the lower court.

      W. S. Snyder, with him M. E. Olmsted and A. C. Stamm, for appellant.
    There was a waiver of the time limit: Baranowski v. Aid Society, 3 Pa. Superior Ct. 367; Anspach v. Heft, 57 Pa. 326.
    There are numerous decisions of this court holding that state officials, by their actions, or by their failure to act, may waive rights which the commonwealth otherwise would have: Ash’s Est., 202 Pa. 422; Com. v. Turnpike Co., 153 Pa. 47; Com. v. Hulings, 129 Pa. 317; Com. v. Ry. Co., 74 Pa. 83; Phila. v. Ry. Co., 142 Pa. 484; Wright v. Village of Portland, 118 Michigan, 23 (76 N. W. Repr. 141); Kriseler v. Le Valley, 122 Mich. 576 (81 N. W. Repr. 580); Sheel v. City of Appleton, 49 Wis. 125 (5 N. W. Repr. 27).

      William M. Hargest, assistant deputy attorney general, with him J. E. B. Cunningham, deputy attorney general, and M. Hampton Todd, attorney general, for appellee.
    The Act of June 30, 1885, P. L. 193, imposes the duty upon its treasurer to deduct the tax upon loans from the interest payable thereon, and upon the failure or neglect of its treasurer to make such deduction the corporation itself is liable for the tax: Com. v. Delaware Div. Canal Co., 123 Pa. 594; Com. v. Ry. Co., 162 Pa. 614.
    July 1, 1910:
    Answering the suggestion that the steel company had every reason to believe that the Union Savings Bank had so paid the tax, it is enough to say it had no reason to have any belief upon the subject. The Union Savings Bank may have taken the full time if it chose, or it may have elected to pay the ten mills on the par value instead of four mills on the actual value of its shares, and in that case it would not have been entitled to the exemption: Com. v. Clairton Steel Co., 222 Pa. 293.
    To maintain a waiver by a state officer some legislative power to waive must be shown: Easton Bank v. Com., 10 Pa. 442; Clark v. Des Moines, 19 Iowa, 199.
    If an exemption exists it must be the result of a deliberate intention to relinquish this prerogative of sovereignty distinctly manifested: Easton Bank v. Com., 10 Pa. 442; New York & Erie R. R. v. Sabin, 26 Pa. 242; Crawford v. Burrell Twp., 53 Pa. 219; Adams v. R. R. Co., 60 L. R. A. 33; Luce v. Cook, 227 Pa. 224.
   Per Curiam,

The judgment is affirmed on the opinion of the learned president judge of the common pleas of Dauphin county.