Commonwealth v. Pennsylvania Water & Power Co.

Opinion by

Mr. Justice Wauling,

Defendant is a water-power company, also called a hydroelectric company, and the sole question here is its liability for a gross income state tax on amounts received from the sale of electric current. It was formed by the consolidation of water-power companies. Neither defendant nor either of its constituent companies was chartered as an electric light company, nor engaged in electric lighting, but a part of the current sold by it is ultimately used for that purpose. The Act of May 8, 1889, P. L. 136, provides for the incorporation, inter alia, of companies for the purpose of supplying light, heat and power by means of electricity. While section 23 of the Act of June 1, of the same year, P. L. 420, 432, imposes a state tax of eight mills upon the dollar, inter alia, upon the gross receipts “from the business of electric light companies.” As to water companies the Act of July 2, 1895, P. L. 425, provides: “That corporations organized, or hereafter to be organized under the laws of this State for the purpose of supplying water power to the public, and other corporations owning or controlling water power may develop electric power for commercial purposes by means of water power, and shall have authority to supply current and power to the public, individuals, firms and corporations at such prices as may be agreed upon.” The charters of the constituent companies confer upon them the powers specified in the statute just quoted. In 1916 the auditor general and state treasurer settled a state tax against defendant upon its gross income from the sale of electric current on the theory that its business was that of an electric light company; but, upon appeal, the Court of Common Pleas of Dauphin County reversed the same and entered judgment for defendant; from which the Commonwealth brought this appeal.

The decision of the court was right. The power to impose a tax is given by statute and an act relating thereto embraces such subjects only as are plainly within its terms. In other words, “A tax law cannot be extended by construction to things not described as the subject of taxation”: Boyd v. Hood, 57 Pa. 98. To entitle the Commonwealth to the tax imposed, the words of the statute must be clear and unambiguous: Com. v. Brush E. L. & P. Co., 204 Pa. 249, 252; Endlich on the Interpretation of Statutes, p. 478, section 345. There is a well-marked distinction between a water-power company and an electric light company, and defendant is clearly the former and not the latter. The fact that a water company converts its power into electric current does not make it an electric light company, and it is the business of the latter that is taxed. Furthermore, “It is agreed as a fact that this corporation [the defendant] does not engage in the business of electric lighting itself, but it does sell electric current to the Edison Electric Lighting Company which sells electric current for lighting purposes in Lancaster” ; and while defendant may properly supply electric current, it has no authority to do electric lighting. Article XYI, section 6, of the state Constitution provides that, “no corporation shall engage in any business other than that expressly authorized in its charter”; and the purpose for which, a corporation is formed must be set forth in the charter: Hey v. Springfield Water Co., 207 Pa. 38, 43. As defendant is neither an electric light company, nor engaged in the business of electric lighting, it is not subject to the tax in question. There may be good reasons why a water-power company should pay a state tax, but that is a matter for the legislature. A tax cannot be imposed by implication. True, the Act of 1889 creates a class of corporations designated as electric light, heat and power companies, but a water-power company does not belong to that class.

The assignments of error are overruled and the judgment is affirmed.