Tax Review Board v. Slater System, Inc.

Dissenting Opinion by

Mr. Justice Bell:

I dissent. Slater Corporation is, in my judgment, merely an agent for various hospitals. The mercantile license tax must be strictly construed, and has not been and cannot be validly construed to tax an agent’s gross receipts, or for example a broker’s gross receipts, or a lawyer’s gross receipts which cover the total sum payable to his client from which he deducts his fee and remits the balance, only the gross fees being taxable. In Philadelphia School District v. Frankford Grocery Co., 376 Pa. 542, 103 A. 2d 738, this Court held that a company which acted as agent for multiple principals to purchase, store and distribute merchandise, was not *484taxable on its gross receipts. The Court said, inter alia (page 552) :

“Thus in Article III, Section 311(d) of its regulations it has excluded from the tax money received by an agent for the purchase of property for his principal, except to the extent that the agent deducts a commission therefrom, and by Section 303(d) and (j) permits the exclusion of receipts by an agent in reimbursement of advancements made by him on account of his principal. Section 311(a) excludes from the tax money received by an agent representing the proceeds of property sold for the account of his principal, the agent being required to report as taxable receipts only commissions retained by him from such monies. Similar exclusions are made with respect to commodity brokers, insurance agents and real estate brokers.”

I would hold that Slater Corporation is liable under the mercantile license tax for the management fee which it receives, and for its so-called administrative expenses which together total 10 per cent, of its total gross receipts.