Baily v. City of Philadelphia

• Decision Date: 21 February 1898
• Docket Number: 448
• Citation: 184 Pa. 594,39 A. 494
• Parties: Joel J. Baily, Henry C. Lea, Theodore Wernwag, Francis B. Reeves, Philip J. Ritter, Jacob A. Datz and John M. Campbell, Appellants, v. The City of Philadelphia, Charles F. Warwick, Mayor of said city, Thomas M. Thomas, Director of Public Works of said city, and John M. Walton, Controller of said city
• Court: Pennsylvania Supreme Court

39 A. 494

184 Pa. 594

Joel J. Baily, Henry C. Lea, Theodore Wernwag, Francis B. Reeves, Philip J. Ritter, Jacob A. Datz and John M. Campbell, Appellants, v. The City of Philadelphia, Charles F. Warwick, Mayor of said city, Thomas M. Thomas, Director of Public Works of said city, and John M. Walton, Controller of said city

No. 448

Supreme Court of Pennsylvania

February 21, 1898

Argued January 24, 1898

Appeal, No. 448, Jan. T., 1897, by plaintiffs, from decree of C.P. No. 4, Phila. County, Nov. 30, 1897, No. 700, refusing preliminary injunction. Affirmed.

Bill in equity to declare illegal and void a lease of the Philadelphia Gas Works.

The bill sets forth that the plaintiffs are residents of the city of Philadelphia, owners of real and personal property situated therein, are payers of state and city taxes, and are consumers of gas in said city; and also that one of their number, to wit: John M. Campbell, is the holder and owner of a certificate of loan of the city of Philadelphia, issued for the extension of its gas works; that on November 9, 1897, the select and common councils of the city of Philadelphia passed an ordinance authorizing the execution of a contract with The United Gas Improvement Company, its successors and assigns by the city of Philadelphia, for the lease to the former of the gas works, street mains, and other real and personal property used for and in connection with the manufacture and distribution of gas in the city of Philadelphia; for the operation, maintenance, enlargement, extension and betterment of the same; for the manufacture and distribution of gas in said city by the said company, its successors and assigns and for the exclusive supply by said lessees and its assigns of all gas to be supplied to consumers during the term of the lease; that for many years prior to the act of April 2, 1790 and at all times since that act, the lighting of its public streets and squares has been done by the city of Philadelphia under statutory power, and for more than sixty years past the said city has owned its gas works and controlled and operated the same, not only for public lighting, but for the supply and distribution of gas to and for the benefit of its citizens and taxpayers; that by an act approved June 1, 1885, the said gas works were placed under the direction, control, and administration of the department of public works, and councils were prohibited from passing any ordinances directing or interfering with the exercise of the executive functions of the mayor, departments, boards, or heads or officers of said city; that if the said ordinance should become operative, and the lease thereunder be executed, the gas works and the supply and distribution of gas would pass from under the direction, control, and administration of the department of public works, and would remain under the direction, control and administration of The United Gas Improvement Company and its assigns, and of officials other than the director of public works and his appointees, and that the executive functions of the director of public works and of the department of which he is the head will for the term of the lease be suspended; that it is the true intent and meaning of the act of June 1, 1885, that the gas works and the supply and distribution of gas shall be under the control of the department of public works, and that no ordinance of councils shall direct or interfere with or impair the exercise by said department of said functions; that the said ordinance is wholly illegal; that the action proposed to be taken by virtue thereof in the execution of the lease is wholly illegal; that the abandonment by the city of Philadelphia and the director of public works of the direction, control and administration of the gas works and the supply and distribution of gas is contrary to law; that one of the plaintiffs is the holder and owner of a certificate of loan, issued by the city of Philadelphia for the extension of its gas works; that by the provisions of the ordinance authorizing said loan it is provided that there shall be annually retained out of the receipts for the sale of gas and other products of the said gas works a certain sum to be used in payment of the interest on said loan and in the creation of a sinking fund for the redemption of said loan at maturity; and that the contract and lease authorized by the ordinance of November 9, 1897, impairs the obligation of the contract existing between the city of Philadelphia and said loanholders by diminishing the sources from which said loan and the interest thereon are payable.

The bill prays that the ordinance and lease thereunder may be declared illegal and void, and that the defendants be enjoined from executing and delivering the said lease.

The defendants filed a demurrer and answer to the effect that the complainants "have not set forth any matter, cause or thing sufficient in law" whereby the respondents should be enjoined as prayed for, and also denying an allegation in the bill to the effect that the plaintiffs will be injured and suffer pecuniary loss by the acts of the defendants done or threatened, and also denying another averment in the bill in which it is alleged that the plaintiffs are informed that an offer has been made by a responsible corporation whereby the city will receive $10,000,000 more for the gas works than it will receive if the proposed lease to The United Gas Improvement Company should be executed or delivered.

Section 3 of the ordinance of December 26, 1868, is as follows:

"Said trustees shall, on or before the thirty-first day of December and the thirtieth day of June in each and every year, until the said loan is paid, retain out of their receipts for the sale of gas and other products of the said gas works, the sum of four per centum on the amount of said loan, for which certificates may have been issued, which they shall pay to the city treasurer, who shall apply three per centum thereof to the payment of the interest of the said loan as the same may fall due, and to no other purpose whatever, and the remaining one per centum shall be paid over by the said treasurer to the commissioners of the sinking fund, who shall invest the same and its accumulations in the loans of the said gas works, or in the other loans of the city of Philadelphia, as 'a sinking fund which is hereby specifically pledged to the payment of said loan, and any surplus remaining after the payment of said loan shall be applied by the commissioners of the sinking fund toward the extinguishment of the other loans to the said gas works, if any; otherwise of the funded debt of the city of Philadelphia.'"

Section 4 of said ordinance further provides as follows:

"That the terms and provisions of the ordinance entitled 'An ordinance for the further extension and management of the Philadelphia Gas Works, approved June 17th, 1841,' shall not apply in any way or manner to this loan, and that nothing contained in this ordinance shall interfere with or obstruct the city of Philadelphia in taking possession of said gas works whenever the councils of the said city may, by ordinance, determine to do so."

The ordinance of June 17, 1841, sec. 1, was as follows:

"The faith of the city, the said sinking fund, and the buildings, apparatus, fixtures and the income and profits of the said gas works shall be and they are hereby pledged for the punctual payment of the interest, and for the ultimate reimbursement of the principal of all the loans made for or on account of said gas works, as the same shall become due; and in order that provision may be made for the same, the said trustees are hereby authorized and required to set apart all the clear net profits that may remain after paying the interest on the said several loans, to constitute a sinking fund, which said sinking fund, with the interest thereon, shall be invested from time to time in the loans to said gas works, or in the loans to the city of Philadelphia; and the said sinking fund shall be kept separate and distinct from the other funds of the said works, and the said trustees shall furnish annually, in the month of January, to the select and common councils, a statement of the amount thereof, and of the stocks in which the same shall be invested."

The plaintiffs moved for a preliminary injunction.

The court in an opinion by ARNOLD, P.J., entered the decree "injunction refused."

Error assigned was in refusing to grant a preliminary injunction.

Decree affirmed at costs of appellants.

George Tucker Bispham and Joseph L. Caven, with them John C. Bell and Peter Boyd, for appellants. -- The ordinance is an interference with certain executive functions which are expressly committed, by the act of June 1, 1885, to the department of public words, and with which councils are forbidden to interfere: Act of March 11, 1789, 2 Sm. L. 462; Act of June 1, 1885, P.L. 37; Western Saving Fund Society v. Phila., 31 Pa. 175; Wheeler v. City, 77 Pa. 338; Carr v. Northern Liberties, 35 Pa. 324; Lehigh County v. Hoffort, 116 Pa. 119; McDade v. Chester, 117 Pa. 414; Erie v. Schwingle, 22 Pa. 384; White v. Meadville, 177 Pa. 643; Com. v. De Camp, 177 Pa. 112; Warwick's Opinions, 1889, p. 48.

The ordinance assumes in respect to the public lighting to delegate a public legislative power, and in respect to the private lighting to confer a monopoly on the grantee; and in both cases to bind the discretion of councils for a long term of years; Dillon on Municipal Corporations, sec. 96; Schenley v. Allegheny, 36 Pa. 29; McKeesport v Railway, 2 Pa. Superior Ct. 249, and St. Louis v. Clemens, 43 Mo. 395; Matthews v. Alexandria City, 68 Mo. 115; Oakland v. Carpentier, 13 Cal. 540; Lord v. Oconto, 47 Wis. 386; State v. Hauser, 63 Ind. 155; Thompson v....