Consumers Ed. and Protective Ass'n v. Schwartz

• Citation: 495 Pa. 10,432 A.2d 173
• Parties: CONSUMERS EDUCATION AND PROTECTIVE ASSOCIATION, et al., v. George X. SCHWARTZ, et al.
• Decision Date: 08 July 1981
• Court: United States State Supreme Court of Pennsylvania

Page 173

432 A.2d 173

495 Pa. 10

CONSUMERS EDUCATION AND PROTECTIVE ASSOCIATION, et al., v. George X. SCHWARTZ, et al.

Supreme Court of Pennsylvania.

Argued May 18, 1981.

Decided July 8, 1981.

[495 Pa. 12] David Kairys, Peter Goldberger, Philadelphia, for appellants.

Alan Davis, Arlan Spector, Philadelphia, for appellees.

Before ROBERTS, NIX, LARSEN, FLAHERTY, KAUFFMAN and WILKINSON, JJ.

OPINION

KAUFFMAN, Justice.

Appellants challenge the order of the Commonwealth Court upholding the validity of salary increases for members of the Philadelphia City Council ("Council") and other elected officials authorized by a 12-0 vote of Council on December 20, 1979. ¹ Eight Council members voting on Bill No. 2357 ("the Salary Bill") had been re-elected approximately six weeks earlier in the November, 1979 election for the term in which the pay raise would be effective. ² At issue is the legality of a Salary Bill adopted after the election of the officials whose pay would be increased thereunder during the term for which they were elected. We hold that the Act of 1927, which remains in full force and effect as to Philadelphia, clearly and unambiguously prohibits any such salary increase and thus renders the Salary Bill null and void. ³ [495 Pa. 13] Accordingly, we reverse the order of the Commonwealth Court, City Council Members v. Consumers Education and Protective Assn., --- Pa.Cmwlth. ---, 428 A.2d 711 and reinstate the final decree of the Court of Common Pleas enjoining

appellees from paying out or receiving the salary increases. ⁴

The Salary Bill became effective at the beginning of Council's new term of office on January 7, 1980, and, inter alia, provided a salary increase of $10,000 per year for all Council members. ⁵ On January 9, 1980, appellants filed a complaint in equity in the Philadelphia Court of Common Pleas seeking preliminary and permanent injunctions against the salary increases on the grounds (1) that the Salary Bill violated the common law and public policy of the Commonwealth because eight of the voting Council members had a direct, personal, and pecuniary interest in its passage; (2) that the Salary Bill was in violation of the Act [495 Pa. 14] of 1927; and (3) that the Salary Bill was in violation of Article III, Section 27 of the Pennsylvania Constitution. ⁶

In support of the Salary Bill, appellees asserted (1) that the public policy of this Commonwealth does not forbid salary determinations by public officials with personal pecuniary interest therein; (2) that the Act of 1927 has been superseded by various provisions of the Philadelphia Home Rule Charter ("Charter"), adopted in 1951 pursuant to the First Class Cities Home Rule Act of April 21, 1949, P.L. 665, 53 P.S. § 13101 et seq. ("Home Rule Act"); and (3) that a municipal pay raise ordinance is not a "law" within the meaning of Article III, Section 27 of the Pennsylvania Constitution.

Argument was limited to the legal issues raised on a stipulated factual record which, by agreement, excluded all questions concerning the social or economic wisdom of the challenged pay raises. ⁷ The lower court, basing its decision on common law conflict of interest principles and on the Act of 1927, entered a decree nisi invalidating the Salary Bill and enjoining appellees from paying out or receiving the salary increases.

Exceptions were heard by a three-judge panel of the common pleas court which, although divided with respect to grounds and reasoning, upheld the decree nisi. On appeal, the Commonwealth Court en banc, two judges dissenting, reversed as to members of Council and several city officials, and affirmed as to the remaining city officials. ⁸

[495 Pa. 15] Appellants filed an emergency petition for allowance of appeal and motion for stay in this Court on April 27, 1981, both of which were granted, and expedited oral argument was heard on May, 18, 1981. ⁹ Appellants

here challenge the Commonwealth Court's reversal on statutory and common law grounds and continue to press the constitutional challenge which was rejected both by the Commonwealth Court and by a majority of the common pleas panel. ¹⁰ Because our holding is supported by the clear and unambiguous prohibition of the Act of 1927, we do not reach the other legal issues raised in this appeal

I

Despite its express recognition that the "time phrases" in the Charter could be reconciled with the limitation of the Act of 1927 forbidding salary increases after election, ¹¹, the Commonwealth Court concluded that the Act of 1927 is in "irreconcilable conflict" with the following Charter provisions:

"Each councilman shall receive a salary at the rate of ... such ... sum as the Council shall from time to time ordain...." (Charter, § 2-100) (551 Pa. Code § 2.2-100) (emphasis supplied).

"Until the Council shall otherwise ordain, annual salaries shall be payable (to the Mayor, Controller, Director of Finance, Treasurer, and other officials) in equal semi-[495 Pa. 16] monthly installments as follows...." (Charter, § 3-600) (351 Pa. Code § 3.3-600) (emphasis supplied).

Relying on the phrases "from time to time" and "until the Council shall otherwise ordain," the Commonwealth Court inferred that the Commission which had drafted the Charter ("Charter Commission") had rejected any and all limitations on Council's compensation powers, and thus had intended to supersede the Act of 1927 pursuant to the authority provided by Section 11 of the Home Rule Act, 53 P.S. § 13111. ¹² The Commonwealth Court further concluded that because the Charter Commission had vested Council with broad compensation powers, salary ordinances promulgated thereunder could not violate the long established and salutary public policy of the Commonwealth.

II

The fundamental public policy principle reflected by the prohibition codified in the Act of 1927 was articulated in the leading case of Commonwealth v. Raudenbush, 249 Pa. 86, 94 A. 555 (1913), where a member of a borough council voted to accept his own resignation in order to take a paying position as water commissioner. We observed:

[495 Pa. 17] It is against public policy for a representative of a municipality to vote in its legislative body on any matter which affects him individually.... A councilman cannot vote on any contract or measure in which he is pecuniarily interested. This was the rule of the common law, and statutes have been enacted in most jurisdictions forbidding such voting. A councilman

cannot act for the municipality and at the same time act for himself individually. He cannot serve two masters at the same time. He is a trustee for the municipality and he may not deal with himself in any matter which concerns it

249 Pa. at 88-89, 94 A. at 555 (emphasis supplied). We thus held that the council member's vote was tainted by conflict of interest, and because his vote was determinative, we invalidated the entire measure.

In Reckner v. School District of German Township, 341 Pa. 375, 19 A.2d 402 (1941) we again observed that, "... it is well settled that no man should act officially in a matter involving discretion, where he is personally interested in the result." 341 Pa. at 376, 19 A.2d at 402. Reckner was a case where a school director cast the deciding vote on a proposal to increase his own salary. We invalidated the pay raise in an unanimous opinion, citing Raudenbush, supra, and noting "... the well founded and long-established public policy that one who has a direct personal interest in a matter under consideration by a representative public agency of which he is a member is disqualified from voting thereon, and if his vote is determinative, the action taken is void." 341 Pa. at 377, 19 A.2d at 403.

Shortly after Reckner, we decided Commonwealth ex rel. McCreary v. Major, 343 Pa. 355, 22 A.2d 686 (1941), a case in which members of the Beaver Falls city council appointed themselves to the Board of the Beaver Falls Municipal Authority. We sustained the lower court's ruling ousting Major from the Board, holding that "... well-established public policy prohibits respondent and his colleagues from using their official appointing power as councilmen of the City of Beaver Falls to appoint themselves members of the [495 Pa. 18] Board of the Authority." Major had argued that the enabling acts of the Legislature creating the Authority, by implication or inference, had waived the applicability of traditional conflict of interest principles. In rejecting that argument, we said:

While it cannot be questioned that the General Assembly has the inherent power to declare the public policy of the Commonwealth and may confer upon members of Council of municipalities power to appoint themselves to membership upon Boards of Authorities and to fix their own salaries, such grant of power must be strictly construed, and unless the intention is clear, the power will be denied, because of its exceptional and extraordinary character. We said, in this connection, in the recent case of Reckner v. German Tp. School District, supra, 341 Pa. at page 378, 19 A.2d at page 403, 133 A.L.R. 1254: "It necessitates an explicit direction on the part of the legislature to overthrow such a wholesome and salutary rule of the common law as that precluding a public servant from simultaneously representing both himself and his constituents. As pointed out in Goodyear v. Brown, 155 Pa. 514, 518, 26 A. 665, 666, 20 L.R.A. 838, 35 Am.St.Rep. 903: ' * * * it does not follow that everything may be done by a public officer that is not forbidden in advance by some act of assembly.' "

343 Pa. at 361-62, 22 A.2d at 689 (emphasis supplied).

Thereafter, in Genkinger v. City of New Castle, 368 Pa. 547, 84 A.2d 303 (1951), we considered a taxpayer's suit which sought to void an ordinance setting up a pension plan for the benefit of city employees, including the council members who voted on the bill. Although the Legislature had specifically authorized councilmen of third class cities to vote on...