AMERICAN LA FRANCE FE v. Borough of Shenandoah
| Decision Date | 11 October 1939 |
| Docket Number | No. 10121.,10121. |
| Parties | AMERICAN LA FRANCE FIRE ENGINE CO., Inc., to Use of AMERICAN LA FRANCE & FOAMITE INDUSTRIES, Inc., v. BOROUGH OF SHENANDOAH. |
| Court | U.S. District Court — Western District of Pennsylvania |
Earl V. McLaughlin and Fred A. Hughes, both of Scranton, Pa., and John B. O'Brien, of Easton, Pa., for plaintiff.
Martin V. McGuire, of Shenandoah, Pa., James J. Gallagher, of Mahanoy, Pa., and Daniel J. Boyle, of Tamaqua, Pa., for defendant.
This action was begun by a bill in equity filed prior to the effective date of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The plaintiff is a manufacturer of fire apparatus. It seeks to recover from the defendant the reasonable rental value of two fire trucks, each consisting of a combination of pump, chemical engine and hose motor car. The new Rules are held applicable to the case, and the doubt as to equity jurisdiction because of an adequate remedy at law is thus eliminated. The trucks were delivered under what is called a "lease contract," which really amounts to a contract to sell, the purchase price of $31,168.01 being payable in annual installments denominated rent, over a period of seven years. The Borough used the trucks from September 6, 1927 to September 24, 1935, during which period certain payments aggregating $16,766.36 were made at irregular intervals. On the last named date, the plaintiff repossessed the trucks.
The written contract was invalid because its execution by the Borough authorities was not properly authorized by ordinance. Recognizing this, the plaintiff based its action upon the quasi-contractual obligation which the law, in some circumstances, imposes upon a municipality which has had the benefit of the use of property or services. The action is not brought either to recover the amount of the agreed payments (price or rental) upon the express contract, or to recover the fair value of the trucks themselves upon an implied contract to pay the purchase price, arising from receipt and retention of the subject of a sale. It is for their fair rental value for the period during which the Borough used them.
There would be no difficulty about the plaintiff's case if the only bar to its recovery were the want of formal authorization for the execution of the contract by the Borough officials. The principle allowing recovery under such circumstances is well recognized. Luzerne Tp. v. Fayette County, 330 Pa. 247, 199 A. 327.
More serious is the objection that any obligation which may arise from the transaction will create a debt beyond the constitutional limit of the Borough's borrowing capacity. At this point we have to deal not with legislative requirements prescribing formalities for municipal contracts, but with a direct constitutional prohibition (supported by a fundamental public policy) against creating the debt in any way, shape, or form whatever. If an obligation does, within the meaning of the Constitution, increase a municipality's indebtedness beyond the legal limit, it makes no difference whether it is expressly assumed, or is implied in fact, or is implied in law (quasi-contract).
The Constitution of Pennsylvania, Article IX, Sec. 8, P.S., provides, "The debt of any county, city, borough, township, school district, or other municipality or incorporated district, except as provided herein, and in section fifteen of this article, shall never exceed seven (7) per centum upon the assessed value of the taxable property therein, * * *." It was agreed that the present Secretary of the Borough council, if called as a witness for the defendant, would testify that in the year 1927 the Borough could contract indebtedness up to the amount of $621,057.92, which amount is 7% of $8,872,256, the assessed valuation of the taxable property, and that the actual debt of the Borough in 1927, excluding any obligation which might arise in connection with these trucks, was $655,214.87.
Laying aside the question raised by the plaintiff as to whether the testimony of this official is competent to establish the facts stated, we may take up at once what appears to be the controlling point in the case.
It has been held in several decisions in...
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Scofield Engineering Co. v. City of Danville
...the protection conferred by the legislature." Compare the majority opinion in this case. And see, also, American-La France Fire Engine Co. v. Borough of Shenandoah, D. C., 30 F.Supp. 251; Id., 3 Cir., 115 F.2d It should be noted that this is not a case where services have been rendered unde......
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