Kiker v. Philadelphia

Dissenting Opinion by

Mr. Chief Justice Maxey :

I think this appellant, a resident of the State of New Jersey, employed on League Island, was justified in challenging the imposition of a tax on him by Philadelphia, for that city since 1868 when it ceded League Island to the Federal government with “exclusive jurisdiction” over it, has had

no

jurisdiction over that island or over any person or property on that island (except the right to serve process), and I would sustain appellant’s challenge.

.There are certain established principles of American constitutional government which rule the question raised in this case. They are as follows:

1. The root of the American system of government is found in the principle of duality of sovereignty:

Com. ex rel. McGlinn v. Smith,

344 Pa. 41, 51 . All courts agree as to the necessity of maintaining this duality.

1

2. A state is without power to impose any taxes on persons or property or any piece of land it has owned but over which it ceded to the Federal government a grant of “exclusive jurisdiction”:

Standard Oil Company v. California,

291 U. S. 242, 244 .

3. A State in ceding, part of its territory to the Federal-government

may

reserve “concurrent jurisdiction”

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over the land so ceded. It may reserve merely the right to execute process within the limits of the land so ceded (as was done when it ceded League Island to the Federal government). Both these propositions under No. 3 are exemplified in

James v. Dravo Contracting Co.,

302 U. S. 134 .

4. “All subjects over which the sovereign pcuver of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles,' exempt from taxation. This proposition may almost be’ pronounced self-evident”: Marshall, C. J., in

McCulloch v. Maryland,

17 Wheat. 315 , 429. See also

Van Brochlin v. Tennessee,

117 U. S. 151, 155 .

5. The United States Supreme Court said: “We take it to be a point settled beyond all contradiction or question, that a State has jurisdiction of all persons and things within its territory which do not belong to some other jurisdiction . .

Coe v. Erroll,

116 U. S. 517, 524 .

2

It is a corrollary of this principle that a State has

no

jurisdiction over any person or thing over which another sovereign power has exclusive jurisdiction.

It is an undisputed fact that when Philadelphia ceded League Island to the Federal government, it reserved no jurisdiction to tax any person or any property on League Island. The question then comes doAvn to this: Did Public Act of Congress No. 819 confer on Philadelphia the power to levy a tax on wages earned on

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League Island

by

a person who was not a resident of Philadelphia or even of Pennsylvania, but who did reside in the State of New Jersey? The power to tax is an attribute of sovereignty, and if one sovereignty confers any part of its taxing power on another sovereignty it must do so in unequivocal language. The transfer of sovereign power is never made by mere

implication.

Public Act No. 819 declares that “No person shall be relieved from liability for any income tax levied by any State, or by any duly constituted taxing authority therein,

having jurisdiction to levy such a tase

[italics supplied], by reason of his residing within a Federal area or receiving income from transactions occurring or services performed in such area; and such State or taxing authority shall have full jurisdiction and power to levy and collect such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area.”

To determine whether the wages of this plaintiff, a resident of New Jersey, can be taxed by Philadelphia by virtue of the Act, we must ascertain whether Philadelphia has “jurisdiction to levy such a tax”, for

only in the event

that Philadelphia has such jurisdiction can it impose any liability on a non-resident of Philadelphia employed in the Federal area of League Island. It is clear to me that Philadelphia had no such jurisdiction when it enacted the income tax ordinance of December 13, 1939 “Imposing a tax for general revenue purposes on salaries, wages, commissions and other compensation earned after January 1, 1940 by . . . non-residents of Philadelphia for work done or services performed or rendered in Philadelphia, . . .” It did not have such jurisdiction at that date because Pennsylvania passed the Act of February 10, 1863, P. L. 24 “ceding to the United States of America the right of exclusive legislation over League Island” and providing in section 3 that upon acceptance by the United Staes “sovereignty and right to exclusive jurisdiction over all the said premises shall be vested in the United States of America.”

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The ordinance of Philadelphia under which the challenged tax was imposed provides in section 10 that it does not purport to apply to any “person as to whom or which it is beyond the legal power of council to impose the tax or duties herein provided for.” In

Philadelphia v. Schaller,

148 Pa. Superior Ct. 276 , the Superior Court of Pennsylvania properly described League Island as being not in, but “near the City of Philadelphia.” The supremacy of the United States over the land ceded (League Island) was also expressly recognized in

Manlove v. McDermott,

104 Pa. Superior Ct. 560 .

The term “jurisdiction” implies that the person or tribunal which has acquired it is thereby empowered to declare or establish an enforceable liability against the person or subject over which it has been acquired:

Santa Cruz Rock Pavement Co. v. Broderick,

45 P. 863 , 113 Cal. 628 . “The word ‘jurisdiction’ as used in sec. 202 of the tax law, N. J. S. A. 54: 4-1, providing that ‘all property, real and personal, within the jurisdiction of this state . . . shall be subject to taxation annually’ means governmental jurisdiction, which is the equivalent of sovereignty”:

Yardley v. Essex County Board of Taxation,

108 A. 299, 300 , 93 N. J. L. 290.

It must be presumed that when Congress enacted Public Act No. 819 it had precise knowledge of the meaning of the word “jurisdiction”. It ill becomes us to say, as does the majority opinion, that when Congress used the word “jurisdiction” it meant “the power of the taxing authority to impose the type of tax mentioned”. I think that if Congress intended to give States and political subdivisions of States the power to impose certain types of taxes on residents or workers in nearby Federal areas it would have plainly said so. The American Congress in drafting laws usually

says

what it means and

means

what it says.

We are not concerned in this case with what some subcommittee of some committee of the United States Senate said as to the purpose of Public Act No. 819. Tt is

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well settled that declarations by

members

of a legislative body as to what

purpose

an act had carries no weight in the interpretation of that act. “No motive, purpose, or intent can be imputed to the legislature in the enactment of a law other than such as are apparent upon the face and to be gathered from the terms of the law itself. A secret intention of the lawmaking body cannot be legally interpreted into a statute which is plain and unambiguous, and which does not express or imply it. Seeking hidden meanings at variance with, the language used is a perilous undertaking which is quite as apt to lead to an amendment of a law by judicial construction as it is to arrive at the actual thought in the legislative mind”: 25 E. C. L. pp. 962, 963, sec. 217. “The intern tion of the legislature is to be obtained primarily from the language used in the statute. The court must impartially and without bias review the written words of the act, being aided in their interpretation by the canons of construction. Where the language of a statute is plain and unambiguous, there is no occasion for construction, even though other meanings could be found; and the court cannot indulge in speculation as to the probable or possible qualifications which might have been in the mind of the legislature, but the statute must be given effect according to its plain and obvious meaning, and cannot be extended beyond it because of some supposed policy of the law, or because the legislature did not use proper words to express its meaning, or the court would be assuming legislative authority”: 59 C. J. pp. 952 et seq., §569. The interpretation the majority opinion puts on Public Act No. 819 leads, according to my view, to absurd consequences. For example, the District of Columbia is a Federal area, precisely as League Island is.

3

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Under the interpretation put upon the Act by the majority opinion, a resident of the State of

Virginia

who earns a salary or wages in the

District of Columbia

could be taxed on that salary or wages by the State of

Maryland ,

because the District of Columbia “is located within the exterior boundaries” of Maryland to which it belonged until Maryland ceded it to the United States, exactly as League Island is located within the exterior boundaries of Pennsylvania, to which it belonged until Pennsylvania ceded it to the United States.

Public Act No. 819 obviously means that if a resident of

Philadelphia

earns wages or a salary on League Island, Philadelphia can tax those wages or that salary without interference from the Federal government; it means that if a resident of League Island earns wages or a salary

in Philadelphia,

Philadelphia can tax those wages or that salary without Federal interference. In each of these instances Philadelphia has “jurisdiction” to levy the tax.

Public Act No. 819 was passed at a time when there was a change in the policy of the United States government as to permitting States to tax the salaries of Federal officials or employees and as to permitting the Federal government to tax the salaries of State officials or employees. This change of policy was revealed in the decision of the United States Supreme Court in

Graves v. New York ex rel. O’Keefe,

306 U. S. 466 , and the enactment of Public Salary Tax Act, i. e. the Act of April 12, 1939, c. 59, Title I, Sec. 4 ( 53 Stat. 575 , 5 U. S. C. A. sec. 84a).

It may be that in enacting Public Act No. 819 Congress intended to make it crystal clear that when a State or a subdivision of a State

had jurisdiction

over the person

or

the property of an individual that person could not resist, with Federal support, the payment of a tax on his wages even though those wages were earned by him in a Federal area, or if he resided in a Federal area and earned wages in a State, that State or its appropri

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ate subdivision could tax those wages without Federal interference. The condition precedent to the taxation by the State or its subdivision of this individual or his wages and salary, was jurisdiction over either him

or

his wages and salary by the taxing authority. In Public Salary Tax Act, supra, the United States consented “to the taxation of compensation, received after December 31, 1938, for personal service as an officer or employees of the United States, any Territory or possession or political subdivision thereof, the District of Columbia, or any agency or instrumentality of any one or more of the foregoing, by any duly constituted taxing-authority having jurisdiction to tax such compensation, if such taxation does not discriminate against such officer or employee because of the source of such compensation.” The majority opinion concedes that “As the result of this Statute, a State could tax its own residents for income earned on Federal property, and could tax nonresidents and residents of a United States reservation for income earned within the State proper, but could not tax non-residents or residents of a Federal area for income earned within the Federal area.” It is significant that in essence the very phrase Congress incorporated in the Public Salary Tax Act, to-wit, “by any duly constituted taxing authority

having jurisdiction

to tax such compensation [italics supplied]”, is also used in Public Act No. 819.

Both the Public Salary Tax Act and Public Act No. 819 make as a condition precedent to the action of any taxing authority to levy a tax, the possession by that authority of “jurisdiction to tax” of the person or thing specified. If, as conceded by the majority opinion, a nonresident of Philadelphia could not under the Public Salary Tax Act be taxed on his salary or wages earned in a Federal area, it is difficult to understand how Philadelphia can under Public Act No. 819 tax a non-resident’s salary or wages earned on League Island. Under the Public Salary Tax Act, the United States “consents” to

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the taxation of the compensation received for personal service by an officer or employee of the United States or by any of its political subdivisions or possessions, such as the District of Columbia or League Island, by any taxing authority having jurisdiction to tax such compensation. Under Public Act No. 819, the United States declares that “No person shall be relieved from liability for any income tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax.” Under

either

Act the possession of jurisdiction to levy the tax on the person or thing involved must be present in the taxing authority, if the person or thing taxed is to be “relieved from liability” for it or if the United States “consents” to it. Congress never gave Philadelphia any jurisdiction to tax this New Jersey citizen or his earnings on a Federal Area and Pennsylvania never consented to such a transfer of a sovereign power to its municipal creature, the City of Philadelphia.

Philadelphia has no more authority to accept

without the express consent of the Commonwealth of Pennsylvania,

jurisdiction to tax wages earned by a non-resident of Philadelphia, on League Island, than it would have to accept, without the Commonwealth’s consent, jurisdiction to indict, try and sentence a resident of League Island for a crime committed in that jurisdiction (which is a jurisdiction as foreign to Philadelphia as is New Jersey).

4

In

McCulloch v. Maryland,

supra, Chief Justice Marshall declared: “The sovereignty of a state extends to everything which exists by its own authority, or

is introduced by its

permission”. (Italics supplied.)

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In

Collins v. Yosemite Park & Curry Co.,

304 U. S. 518 , it was declared: “Jurisdiction obtained by consent or cession may be qualified by agreement [of a State and the National government] or through offer and acceptance or ratification. It is a matter of arrangement.”

In the case now before us Congress never offered to cede to Philadelphia any part of the “exclusive jurisdiction” it obtained over League Island more than three-quarters of a century ago and Pennsylvania and Philadelphia never accepted any such offer. There has been no “arrangement” on this question between the Federal government and the City of Philadelphia, or the State of Pennsylvania.

If Congress had wished to cede to Philadelphia the sovereign power to tax all property, whether real estate or wages earned, on League Island, it could have done so by an Act plainly stating that fact, and the City of Philadelphia,

if duly authorized to do so by the State of Pennsylvania,

could have formally accepted the grant of such sovereign power. There has been no such “arrangement” here between the respective State and Federal governments. We do not even know whether the State of Pennsylvania would authorize the City of Philadelphia to accept any such grant of sovereign power (i. e. the power of taxation) from the Federal government. There might be reasons of sound public policy why Pennsylvania would refuse any such cession from the Federal government of sovereign power over land it had ceded at an earlier date to that Federal government.

The case of

Superior Bath Co. v. McCarroll,

312 U. S. 176, 178 (cited in the majority opinion) is easily distinguishable from the case at bar. In that case, the facts were that Arkansas in 1903 ceded to the United States exclusive jurisdiction over the business area of the Hot Springs reservation, “reserving only the right to tax accorded in the 1891 Act [of Congress] and the right to serve criminal and civil process,” The United

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States Supreme Court said (p. 177) : “Whether appellant is subject to the state tax depends on the interpretation of the language of a provision of a Congressional Act of 1891 and the corresponding provision of an Arkansas Act of 1903.”

The City of Philadelphia as a part of Pennsylvania should

not

invite the Federal Congress to “give it” power to tax persons and property clearly outside the jurisdiction of Philadelphia or of Pennsylvania. To solicit the grant of any such power from Congress is to put the State in the róle of a suppliant and is in derogation of its dignity and its sovereignty. Many observers think that the impairment of the sovereign powers of the States has already gone to lengths that are inimical to the delicate and proper balacing of the respective powers of the National and the state governments.

5

If the Federal government grants to Pennsylvania or to one of its subdivisions the sovereign power to tax the property (wages) of a New Jersey citizen employed on League Island on Federal governmental work, thereby increasing (in the long run) the cost of that work, it can easily recoup itself by increasing the income taxes laid on citizens of Pennsylvania, of Philadelphia and of every other State in the Union. For every dollar Philadelphia may gain by this tax on wages earned by New Jersey citizens on League Island, its citizens will probably pay several dollars in increased Federal taxation.

States or nations do not tax individuals or property out of reach of their sovereign power. Where a man

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resides,

there he

is subject to taxation. Where his property is,

there it

is subject to taxation, and “Legal protection and taxation are reciprocal”:

Glen Alden Coal Co. v. Commissioners,

345 Pa. 159, 179 , 27 A. 2d 239 . For the tax Philadelphia seeks to impose on this plaintiff neither he nor his property receives any reciprocal protection. He owes Philadelphia no economic allegiance.

This tax is also an example of “taxation without representation”, a principle which should still command some respect in this country, even though there are some conspicuous examples of its violation by the Federal government. Here plaintiff does not reside in Philadelphia and has no property there, and while property can always be taxed by the sovereignty which protects it, it is an anomaly in government for a State or city to attempt to tax a non-resident of that State or city on property

not

situated in that State or city. I do not believe that Public Act No. 819 was intended by Congress to create any such absurd situation. Certainly its language does not require the judicially sponsored birth of any such bizarre governmental innovation.

The decision of the United States Supreme Court in

Graves v. New York ex rel. O’Keefe,

306 U. S. 466 (cited in the majority opinion) has

not the slightest hearing on this case.

That decision destroyed the previously enjoyed constitutional correlative immunity from income taxation of the salaries of officers or employees of national and state governments. That immunity had been based on the postulate that for one sovereignty to tax the salaries of the officials of another sovereignty was a tax on the instrumentalities of that sovereignty and therefore impliedly prohibited by the very nature of our constitutional system of dual sovereignties. See

Metcalf and Eddy v. Mitchell,

269 U.S. 514 . That doctrine long adhered to, has now been rejected by the United State Supreme Court,

6

and it followed that the salary

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received, for example, by the Governor of Pennsylvania as an individual was subject to an income tax imposed by the Federal government, and it also followed that the salary received by the President of the United States, who resided in New York State, was subject to an income tax imposed by the State of New York, but it does not follow that the President or any other Federal official whose legal residence is

not

in Maryland could be taxed by Maryland on his salary or wages earned in the Federal area of the District of Columbia, which once belonged to and is now “located within the exterior boundary” of Maryland. The plaintiff being a

resident of New Jersey,

is not subject to the taxing jurisdiction of Philadelphia, neither are his wages

earned on League Island

subject to the taxing jurisdiction of Philadelphia. Therefore, Philadelphia has

no

jurisdiction to levy a wage tax on him.

It is my contention that Congress never conferred on Philadelphia jurisdiction to tax any New Jersey resident on his wages earned in the Federal area of League Island or in any other Federal area, and that if Congress should attempt to confer on Pennsylvania any sovereign power over League Island, such a transfer would not be effective until the state of Pennsylvania by a legislative act consented to accept it, just as the United States by a formal act of Congress on February 18, 1867, 14 U. S. St. at L. C 46 p. 396., accepted sovereignty over League Island after Pennsylvania by its act of February 10, 1803, supra, and later acts, ceded to the U. S. state sovereignty over League Island (with a minor reservation as to the service of process). Pennsylvania can obtain the power to tax persons or property on League Island, only from the United States, and Philadelphia can obtain its power to tax

anywhere,

only from Pennsylvania.

We said in

Passenger Ry. Co. v. Pittsburgh,

226 Pa. 419 , 75 A. 662 : “There is no such thing as taxation by implication . . . taxation is a sovereign state governmental power not possessed by municipalities or mu

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nicipal divisions unless delegated to them”. Cooley on taxation, fourth edition, Yol. 1, sec. 125 says: “The municipal corporation of a state having no inherent power to tax must take such power as is conferred under the conditions and limitations that may be prescribed, and only for such positions as may be expressed”.

The majority opinion cites

Mason Co. v. Tax Comm’n,

302 U. S. 186, 207 , as authority for the proposition that “acceptance [of the transfer.of sovereign power] will be presumed in the absence of a contrary intent.” That phrase as used in that opinion was

dictum,

for in that very case the United States Supreme Court found that the Federal government had

not

assumed “an exclusive legislative authority which it did not need.” In the same opinion the United States Supreme Court said that such a transfer of jurisdiction “rests upon a grant . . . and the grant may be accepted or declined.” In the instant case there

was

no grant to Pennsylvania (or to Philadelphia) of any sovereign power or jurisdiction to tax persons or property on League Island. Congress simply declared in Public Act No. 819 that in those cases where a person was liable for any income tax levied by any state or any taxing authority therein, “having jurisdiction to levy such a tax”, he should not be relieved from that liability “by reason of his residing within a Federal area or receiving income from transactions occurring on services performed in such area”. Philadelphia is under Act No. 819 obliged to show its

possession of jurisdiction

over this taxpayer, i. e., its jurisdiction to “levy

such a tax on this person’s income”,

before it can say to him: “You are not relieved of liability from our city income tax by reason of the fact that you receive your income for services performed in the Federal area of League Island”. New Jersey could legally say that to this taxpayer for New Jersey

has

jurisdiction over him; and the United States can legally say to him: “We can tax your income from services performed on League Island because toe

are sovereign there”.

But no grant of sovereign power over persons or incomes on League Island,

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by the United States

to

Pennsylvania, nor the acceptance of any such grant of power

by

Pennsylvania can be found anywhere in this record. If Pennsylvania does not possess such jurisdiction over League Island, it follows that its statutory creature, the city of Philadelphia, possesses no jurisdiction.

7

The United States still retains over League Island

all

the sovereign power which exclusively accompanied the formally accepted cession of this area to the United States in 1868. The City of Philadelphia has

no

jurisdiction

over persons or things on League Island.

Its official power

ends

when it reaches the Island’s

borders

(except the retained power of serving process). I repeat: Philadelphia has no more power under Public Act No. 819 or under any other Federal Act, to tax a citizen of New Jersey on his salary or his wages earned on League Island than Maryland has to tax a resident of Virginia or of New York or of any other state on his salary or wages earned in the District of Columbia, which is a Federal area “located within the exterior boundaries” of Maryland, exactly as League Island is a Federal area “located within the exterior boundaries” of Pennsylvania.

I would give to the plaintiff the relief which he asks for and to which I think he is clearly entitled.

Mr. Justice Patterson joins in this dissent.

1

No political dreamer was ever wild enough to think of breaking down the lines which separate the States and of compounding the American people into one common mass:

McCulloch v. Maryland,

17 Wheat. 315 , 402.

2

In

Kirtland v. Hotchkiss,

300 U. S. 491 , the United States Supreme Court said (quoting from an earlier case) : “ ‘Unless restrained by provisions of the Federal Constitution, the power of the State as to the mode, form, and extent of taxation is unlimited,

where the subjects to which it applies

are within her jurisdiction.’ (Italics supplied.) . . . AVe perceive no reason to modify the principles announced in these cases or to question their soundness. They are fundamental and vital in the relations which, under the Constitution, exist between the United States and the several States. Upon their strict observance depends, in no small degree, the harmonious and successful working of our complex system of government, Federal and State. . . .”

3

Public Act No. 819 in sec. 6 (e) says: “Tbe term ‘Federal area’ means any lands or premises held or acquired by or for the use of the United States or any department, establishment, or agency of the United States; and any Federal area, or any part thereof, which is located within the exterior boundaries of any State shall.be deemed to be a Federal area located within such State.”

4

A State is without jurisdiction to punish offences committed in a ceded area. In

Commonwealth v. Clary,

8 Mass. 72 , it was held: “No offences committed within that [ceded] territory are committed against the laws of this Commonwealth; nor can such offences be punishable by the courts of this Commonwealth unless the Congress of the United States should give to the said courts jurisdiction thereof.” See also

U. S. v. Travers,

Fed. Cas. 16537 and

Murray v.

Gerrich, 291 U. S. 315 ;

Bank of Phoebus v. Byrum,

110 Va. 708 .

5

President Andrew Jackson in liis Farewell Address said: “There have always been those who wish to enlarge the powers of the General Government. Its authority is sufficient for all the purposes for which it was created; these powers are enumerated and every attempt to exercise power beyond those limits should be firmly opposed. For one evil example will lead to other measures still more mischievous, and if . . . supposed advantages or temporary circumstances shall ever be permitted to justify the assumption of a power not given by the Constitution, the General Government will before long absorb all the powers of legislation and we will have one consolidated Government.”

6

See discussion in

Marson v. Phila.,

342 Pa. 369, 372, 373 , 21 A. 2d 228 .

7

The following three declarations of the U. S. Supreme Court are applicable here: From

Frick v. Pennsylvania,

268 U. S. 473 , 489: “It is also essential to the validity of a tax that the property shall be within the territorial jurisdiction of the taxing power. Not only is the operation of state laws limited to persons and property within the boundaries of the State, but property which is wholly and exclusively within the jurisdiction of another State, receives none of the protection for which the tax is supposed to be the compensation.” From the

Foreign-held Bond case, 15

Wall. 300, 319: “The power of taxation, however vast in its character and searching in its extent, is necessarily limited to subjects within the jurisdiction of the State. These subjects are persons, property, and business”. From

Wachovia Trust Co. v. Doughton,

272 U. S. 564 , 575: “A state may not subject to taxation things wholly beyond her jurisdiction or control”.