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City of Philadelphia v. Smith

Decided: April 2, 1980.

CITY OF PHILADELPHIA, PLAINTIFF-RESPONDENT,
v.
GEORGE A. SMITH, JR., CHARLES W. BONNEN, JAMES L. ALESI, WILLIAM A. BERENATO, MYRL P. EVANS AND ANDREW FELIX BELLA, SR., DEFENDANTS-APPELLANTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 169 N.J. Super. 156 (1979).

For affirmance -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For reversal -- None. The opinion of the Court was delivered by Sullivan, J.

Sullivan

This appeal by defendants presents the question whether the Full Faith and Credit Clause, U.S. Const., Art. IV, § 1, requires a state to recognize that portion of a sister state's money judgment representing a civil penalty for unpaid taxes. Our conclusion is that such recognition must be given.

Defendants are New Jersey residents employed by the federal government on the naval base in Philadelphia. They are subject to the Philadelphia Wage and Net Profits Tax Ordinance (City Code § 19-508), but failed to pay the tax due under the ordinance. The federal employer did not withhold these wage taxes. See 5 U.S.C.A. § 5520. Suits were filed against defendants in the Commonwealth of Pennsylvania and default judgments obtained for the taxes due, interest thereon, and a civil penalty of 1% a month on the amount of the unpaid tax pursuant to section 9-508 of the Philadelphia City Code which provides:

Taxpayer-*fn1 Taxes, Costs

Defendant and Interest Penalty

Alesi $2,216.15 $358.76

Berenato 1,904.39 311.34

Evans 1,494.10 235.79

Bella 1,413.64 231.18

Philadelphia then filed a consolidated action in Camden County against defendants based on the judgments obtained in Pennsylvania. The trial court entered judgments in favor of the City for the amount of the unpaid taxes, costs and interest. However, it disallowed the amount of the penalty on the ground that full faith and credit did not require this State to enforce a tax penalty imposed by a sister state, even though the penalty was included in a money judgment obtained by that state against the delinquent taxpayer.

On appeal by the City of Philadelphia the Appellate Division held that the entire amount of the Pennsylvania judgments, including penalties, must be given full faith and credit. 169 N.J. Super. 156 (App.Div.1979). We granted defendants' petition for certification. 81 N.J. 355 (1979).

The Philadelphia wage tax has generated considerable litigation, particularly with regard to its applicability to New Jersey residents who are employed by the federal government in Philadelphia. See, e.g., In re Thompson, 157 F. Supp. 93 (E.D.Pa.1957), aff'd sub nom. United States ex rel. Thompson v. Lennox, 258 F.2d 320 (3 Cir. 1958), cert. den. 358 U.S. 931, 79 S. Ct. 317, 3 L. Ed. 2d 303 (1959) ...


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