Central Contracting Co. v. C. E. Youngdahl & Co.

• Decision Date: 03 May 1965
• Citation: 209 A.2d 810,418 Pa. 122
• Parties: CENTRAL CONTRACTING COMPANY, a Corporation, Appellant, v. C. E. YOUNGDAHL & COMPANY, Inc., Crump, Incorporated--Psaty & Fuhrman, Inc., a joint venture, and Housing Authority of the City of Pittsburgh, a Public Corporation, Garnishee.
• Court: Pennsylvania Supreme Court

209 A.2d 810

418 Pa. 122

CENTRAL CONTRACTING COMPANY, a Corporation, Appellant, v. C. E. YOUNGDAHL & COMPANY, Inc., Crump, Incorporated--Psaty

& Fuhrman, Inc., a joint venture, and Housing Authority of the City of Pittsburgh, a Public Corporation, Garnishee.

Supreme Court of Pennsylvania.

May 3, 1965.

[Copyrighted Material Omitted]

Bresci R. P. Leonard, Royston, Robb, Leonard, Edgecombe & Miller, Pittsburgh, for appellant.

John A. Metz, Jr., Metz, Cook, Hanna & Kelly, A. Leonard Balter Harry Rubin, Rubin & Balter, Everett E. Utterback Pittsburgh, for appellee.

Before BELL, C. J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

COHEN Justice.

This is an appeal by plaintiff, in an assumpsit action, from an order of the lower court en banc sustaining preliminary objections to foreign attachment ^[1] and to jurisdiction; the latter objection was apparently based upon certain arbitration clauses set forth in the contract.

In 1960, plaintiff-appellant, Central Contracting Company (Central) entered into an agreement with a party contracting under the name of 'C. E. Youngdahl & Company, Inc.--Crump, Incorporated--Psaty & Fuhrman, Inc., A joint Venture.' The joint venture had a general contract with the Pittsburgh Housing Authority. Central agreed with the joint venture to do certain painting work generated by the general contract. Central brought suit against the joint venture, alleging that 'defendants required plaintiff to perform extra and additional painting services' for which Central sought compensation, and against the Housing Authority as garnishee.

While the lower court did not dismiss the complaint or enter judgment against the plaintiff or order arbitration, its order so restricted Central's further action 'as, virtually to put [it] out of court on the cause of action which [it] seeks to litigate,' Sullivan v. City & County of Philadelphia, 378 Pa. 648, 649, 107 A.2d 854, 855 (1954), and, therefore, the order below is appealable.

The lower court held that property in the hands of a Housing Authority, organized pursuant to the Housing Authorities Law of 1937, Act of May 28, 1937, P.L. 955, 35 P.S. § 1541 et seq., is, ipso facto, immune from an otherwise appropriate foreign attachment because the Authority Could not be summoned as garnishee. This was error.

Appellee argues that as a 'general rule * * * the United States, the states and their political subdivisions and agencies cannot be summoned as garnishees in any action, without statutory statutory authorization or consent or waiver.' 6 Am.Jur.2d, Attachment and Garnishment § 78, p. 615. See also 17 McQuillin, Municipal Corporations, § 49.86 (1950 ed.). Pennsylvania courts have applied this so-called general rule to prohibit attachment of property in the hands of the Pennsylvania Turnpike Commission, Iron City Spring Co. v. Teer, 53 Dauph. 118 (1942), the Urban Redevelopment authority of Pittsburgh and the Public Parking Authority of Pittsburgh, Richter v. George Doherty Lumber Co., 16 Pa.D. & C.2d 181 (1958), and the City of Pittsburgh, Wood Refrigerating Co. v. Preston, 7 Pa.D.& C.2d 648 (1956). The most recent case in which this Court discussed this rule was Haines v. Lone Star Shipbuilding Co., 268 Pa. 92, 110 A. 788 (1920). In Haines we did not apply the rule for reasons discussed below.

Appellee further contends that, because Section 10 of the Housing Authorities Law provides that '[a]n authority shall constitute a public body, corporate and politic, exercising public powers of the Commonwealth as an agency thereof * * *,' ^[2] and because, in certain other contexts, we have recognized its public or governmental nature, ^[3] we should determine that, under the so-called general rule, it cannot be summoned as garnishee in foreign attachment proceedings. Granting, for present purposes only, that the Housing Authority is engaging in governmental projects on behalf of the Commonwealth, nevertheless, we cannot agree with appellee's position.

It is apparent that the rationale behind the so-called general rule, as stated first in Bulkley v. Eckert, 3 Pa. 368 (1846) has little force in the instant circumstances.

'Great public inconvenience would ensue, if money would be thus arrested in the hands of officers, and they be made liable to all delay, embarrassment, and trouble that would ensue, from being stopped in the routine of their business compelled to appear in court, employ counsel, and answer interrogatories, as well as take care that the proceedings are regularly carried on, and bail to return duly given.' ^[4]

The activities carried on by the Housing Authority implicate it in various and complex legal relationships involving bonds, construction contracts, and leases. This is why '[a]ny Authority may employ its own counsel and legal staff.' ^[5] In this context it is plain that the duties of a garnishee in foreign attachment proceedings are not overly burdensome upon an Authority. ^[6] Indeed, rather then 'being stopped in the routine of their business,' Bulkley, supra, this type of everyday legal work is routine business for the Authority.

Moreover, notwithstanding their public and nonprofit nature, Housing Authorities engage in activities that have the aspect of large scale, private commercial enterprises and, in the course of these activities, deal extensively with the private commercial world. In part, similar considerations moved us in Haines v. Lone Star Shipbuilding Co., supra, to hold that the Emergency Fleet Corporation could be summoned as garnishee in foreign attachment proceedings, although we recognized that it might be called 'an agent of the [federal] government, and a highly important agent,' formed by the United States Shipping Board for 'the preparation of the United States Government for its successful entry into and conclusion of the war with Germany.' We found that since Congress had chosen to allow the Shipping Board to work through a corporation, formed like a regular business corporation, it should have 'its disabilities as well as its desirabilities, save only as the Shipping Act limited them.' While the Housing Authority is not formed like a regular corporation we cannot rightly say our Haines decision was bottomed on such a limited ground, in view of our favorable citation therein of Judge Learned Hand's statement: 'Moreover, it is highly desirable that, in entering upon industrial and commercial ventures, the governmental agencies used should, whenever it can fairly be drawn from the statutes, be subject to the same liabilities and to the same tribunals as other persons or corporations similarly employed.' Haines, supra, 268 Pa. at p. 101, 110 A. at p. 790.

Turning to the Housing Authorities Law, it provides that the Authority may 'sue and be sued'. Act of May 28, 1937, P.L. 955, § 10(t), 35 P.S. § 1550(t). We see no reason why these words should be narrowed by implication to exclude an ordinary legal process incident to suit. In Rader v. Pennsylvania Turnpike Commission, 407 Pa. 609, 182 A.2d 199 (1962), the matter was quite different. There we held that, in view of the fact that roadbuilding was a traditional and, by statute, 'essential governmental function,' the Legislature would not be deemed to have waived the Commonwealth's immunity from tort liability in respondeat superior in the absence of express provisions to that effect, even though the Commission could 'sue and be sued.' Amendability garnishment process incident to foreign attachment proceedings is not analogous to tort liability in respondeat superior.

For similar reasons, the Supreme Court of the United States held that the Federal Housing Administration was subject to state garnishment proceedings. Federal Housing Administration v. Burr, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724 (1940).

'[W]hen Congress establishes such an agency, authorizes it to engage in commercial and business transactions with the public, and permits it to 'sue and be sued,' it cannot be lightly assumed that restrictions on that authority are to be implied. Rather if the general authority to 'sue and be sued' is to be delimited by implied exceptions, it must be clearly shown that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the 'sue and be sued' clause in the narrow sense. In the absence of such showing, it must be presumed that when Congress launched a governmental agency into the commercial world and endowed it with authority to 'sue or be sued,' that agency is not less amenable to judicial process than a private enterprise under like circumstances would be.' p. 245, 60 S.Ct. p. 490.

Finally, there can be no doubt that the Authority would be amenable to suit on its agreement with the general contractor. In this light, it would be difficult to support a conclusion that it is not amenable to garnishment process at the instance of a subcontractor-creditor, whose rights, if any, arise out of work on the project contracted for by the Authority.

Although the lower court erred in deciding that the Housing Authority was not amenable to garnishment process in a foreign attachment action, we cannot decide, on the present record, whether or not the attachment ultimately should be upheld. The general contractor was comprised of a domestic corporation and two foreign ones. The group dealt with Central as a joint venture, as evidenced by such designation in its contract with Central. Thus, it was proper for Central to bring its suit on the contract against the joint venture as the party-defendant. And, presumably, its...