Commonwealth v. National Advertising Co.

Dissenting Opinion by

Mr. Justice Pomeroy:

I do not dispute the proposition that this regularly made tax assessment is presumed to be valid, Deitch Co. v. Board of Property Assessment, 417 Pa. 213, 209 A. 2d 397 (1965), nor the proposition that where the assessment is based upon a certain view of the operative facts, the burden must rest on the taxpayer to demonstrate that the facts are not as the authorities have found them, Commonwealth v. R. S. Noonan, Inc., 419 Pa. 411, 213 A. 2d 787 (1965). Neither of these principles, however, can be said to control this case. The majority opinion, in my view, misapplies both and rides roughshod over a legislative enactment regarding construction of tax statutes. I accordingly dissent.

The Pennsylvania Corporate Net Income Tax Act, May 16,1935, P. L. 208, §1 et seq., as amended, 72 P.S. §3420a et seq., provides that “rentals . . . from property situated . . . within this Commonwealth” shall be included in the numerator of the gross receipts, or third fraction used in determining taxable net income of a corporation all of whose business is not transacted in the Commonwealth. The majority correctly perceives that the issue is solely that of interpreting the word *65“rentals” as used in this phrase. There is no dispute as to the operative facts—the manner in which the appellant corporation uses its Pennsylvania situated billboards, or “bulletins,” in its business—and hence the majority’s citation to cases which deal with the placement of the burden of proof as regards operative facts is inapposite.

The Statutory Construction Act, Sec. 58(3), Act of M!ay 28, 1937, P. L. 1019, 46 P.S. §558(3), provides that provisions of a law imposing taxes shall be strictly construed against the taxing authority. See, e.g., Mastrangelo v. Buckley, 433 Pa. 352, 250 A. 2d 447 (1969) ; Commonwealth v. High Welding Co., 428 Pa. 545, 239 A. 2d 377 (1968); Commonwealth v. Rieck Inc., 419 Pa. 52, 213 A. 2d 277 (1965); Panther Valley Television Co. v. Borough of Summit Hill, 376 Pa. 375, 102 A. 2d 699 (1954). It is admitted in the Court’s opinion that interpretation of the word “rentals” is not easy, and that, as viewed by the majority, the line must be drawn at some ill-defined point lying somewhere between income received for rendition of personal services and income received from the “rental” of property. Having admitted that there is considerable uncertainty in the reach of this legislatively chosen word, I cannot understand how the issue can then be resolved against the taxpayer. We have always held that “any doubt or uncertainty as to the imposition of a tax must be resolved in favor of the taxpayer.” Commonwealth v. Rieck Inc., supra.

The preferable manner in which to decide this case, in my opinion, would be to recognize that the legislature has directed us to construe a word “according to [its] common and approved usage.” 46 P.S. §533. The common, almost invariable usage of the word “rent” or “rental” is to describe the consideration paid by a tenant or occupant of real estate for the right of posses*66sion, use and occupation of the property. See Webster’s Third International Dictionary; Black’s Law Dictionary (4th Ed. 1968); 48 Am. Jur. 2d, Landlord & Tenant, §514. It is a stipulated fact in the present case that appellant’s advertisers have no right of possession of the bulletins or sign boards; the sole use of the signs is the placement of advertisements upon them, but this is done by appellant. The majority’s construction of the word “rentals” as denoting income earned primarily by virtue of the ownership of tangible property and secondarily through the rendition of personal services may not be out of place in a textbook on economics; it is, however, a far cry from the “common and approved” usage the legislature must be held to have intended.

In another context we have recently stated, although the statement may not have been necessary to the decision, that income received from outdoor advertising customers was not to be considered as rent. Pittsburgh Outdoor Advertising Co. Appeal, 440 Pa. 321, 324, 272 A. 2d 163 (1970). I am unable to perceive any compelling reason to hold the opposite in this case, especially in light of the legislative direction to resolve uncertainty in favor of the taxpayer.