Faden v. Philadelphia Housing Authority

• Decision Date: 06 January 1967
• Citation: 424 Pa. 273,227 A.2d 619
• Parties: Ruth M. FADEN, Appellant, v. The PHILADELPHIA HOUSING AUTHORITY and H. Gold, Inc.
• Court: Pennsylvania Supreme Court

Page 619

227 A.2d 619

424 Pa. 273

Ruth M. FADEN, Appellant, v. The PHILADELPHIA HOUSING AUTHORITY and H. Gold, Inc.

Supreme Court of Pennsylvania.

Jan. 6, 1967.

Rehearing Denied April 7, 1967.

Ethel S. Barenbaum, Herman M. Barenbaum, Barenbaum & Barenbaum, Philadelphia, for appellant.

Joseph Mistrano, Philadelphia, for appellee.

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

OPINION OF THE COURT

ROBERTS, Justice.

This is an appeal from the action of the court below sustaining preliminary objections of appellee, the Philadelphia Housing Authority and dismissing the complaint.

Appellant, Ruth M. Faden, brought suit in her capacity as a taxpayer of the City of Philadelphia against the Philadelphia Housing Authority, seeking to set aside a contract between the Authority and H. Gold, Inc., a contractor, and for such other relief as would be just and equitable. The gravamen of her complaint was that the contract in question, which was for the replacement and conversion of coal-fired boilers at an Authority housing project, had not been awarded to the lowest responsible bidder as mandated by the Housing Authority Law, Act of May 28, 1937, P.L. 955, § 11, as amended, 35 P.S. § 1551.

The Authority filed preliminary objections to the complaint, alleging, Inter alia, that a taxpayer lacked standing to challenge Authority action since no tax funds were directly involved. The objections were sustained on this ground and the complaint dismissed. This appeal followed.

Approximately three months subsequent to the filing of the appeal the Authority moved this Court to dismiss the appeal under Supreme Court Rule 41, on the ground that the controlling question had become moot. In support of its motion, the Authority alleged that all work to be performed under the contract had been completed, ¹ dissolving the controversy and precluding equity from granting the requested relief.

In her answer to this motion, appellant asserted that she was without sufficient knowledge or information to form a belief as to the truth of the Authority's allegations and that all means of proof thereof were in the exclusive control of the Authority. The allegations were therefore denied and proof demanded.

This Court is of the opinion that the motion to dismiss thje appeal on the ground that the controlling question had become moot must be denied. Appellee has failed to support its allegations by deposition, as required by Supreme Court Rule 41 ² when such allegations are controverted. In these circumstances, it would be necessary to receive proof of the allegations contained in the Authority's motion before it can be ruled on, a task for which the court below is far better equipped than this Court.

More importantly, even assuming the correctness of appellee's averment that the work on the furnaces has been completed, this does not moot this litigation. Appellant's prayer for relief in the court below did not seek only to restrain the defendant contractor from performing its duties under the contract, it also sought to restrain the defendant Philadelphia Housing Authority from performing its duties and in addition 'such other and further relief as may be deemed just and reasonable.' Thus it may be that appellant is still entitled to restrain the Housing Authority from making some part or all payment to the appellee-contractor, cf. Yoder v. Luzerne Township School District, 399 Pa. 425, 160 A.2d 419 (1960); Philadelphia Co. v. City of Pittsburgh, 253 Pa. 147, 97 A. 1083 (1916) or if payment has been made, that some other relief in the nature of restitution of monies to the Housing Authority may be available to appellant. By saying this we in no way intimate any view as to the type of relief, if any, which could appropriately be granted by the court below in this case; all we do say is that, absent any argument by appellant showing why such further relief is not available, this Court cannot say that completion of performance renders this case moot. ³

We turn, therefore, to the sole issue raised by this appeal: whether appellant, as a resident and taxpayer of the City and School District of Philadelphia, has standing to institute an action in equity against the Philadelphia Housing Authority.

This Court has recently struggled with the concept of standing as it affects the right of a taxpayer to maintain a suit against a public body. See, e.g., Price v. Philadelphia Parking Authority, 422 Pa. 317, 221 A.2d 138 (1966); White v. City of Philadelphia, 408 Pa. 397, 184 A.2d 266 (1962); Loewen v. Shapiro, 389 Pa. 610, 133 A.2d 525 (1957). And although many reasons have been advanced for granting standing to taxpayers, the fundamental reason for granting standing is simply that otherwise a large body of governmental activity would be unchallengeable in the courts. Note, Taxpayers' Suits: A Survey and Summary, 69 Yale L.J. 895, 904 (1960). Moreover, it has been recognized that 'the availability of such litigation is insurance against the instances in which responsible prosecutors, usually political officers, are themselves allied with the action challenged or are overly burdened to identify and rectify every * * * illegal practice.' Id. at 911; see also Jaffe, Standing To Secure Judicial Review: Public Actions, 74 Harv.L.Rev. 1265, 1280, 1282 (1961).

Yet the reasons for permitting taxpayer litigation involving nonauthority governmental bodies seem to be forgotten when applied to suits brought against public authorities. Rather than recognize the fact that public policy favors judicial review of the statutory and constitutional validity of the acts of public bodies and officials, courts too often require strict compliance with the traditional requirements, developed long before the advent of the public authorities, that the taxpayer establish a direct pecuniary loss. Merely because a governmental unit has chosen to perform its public functions through an authority rather than directly affords no basis for granting such an authority greater immunity from taxpayer challenge than the body which created the authority. Nor does a rule permitting taxpayers to challenge in court the conduct of public authorities create the possibility that public functions will be unduly disrupted by the groundless legal challenges of isolated individuals. The court's proven ability to deal effectively with such challenges to governmental bodies receiving direct tax support can just as easily be employed to protect public authorities receiving indirect tax support. Cf. Schade v. Allegheny County Institution, Dist., 386 Pa. 507, 511, 126 A.2d 911, 913 (1956).

This Court has recently recognized the need to subject the activities of public authorities to judicial scrutiny. ⁴ In Price v. Philadelphia Parking Authority, 422 Pa. 317, 329, 221 A.2d 138, 145 (1966), the Court stated:

'As public bodies, * * * (authorities) exercise public powers and must act strictly within their legislative mandates. Moreover, they stand in a fiduciary relationship to the public which they are created to serve and their conduct must be guided by good faith and sound judgment. See Schwartz v. Urban Redevelopment Auth., 411 Pa. 530, 536, 192 A.2d 371, 374 (1963); Heilig Bros. Co. Inc. v. Kohler, 366 Pa. 72, 77--78, 76 A.2d 613, 616 (1950). The mushrooming of authorities at all levels of government and the frequent complaint that such bodies act in an arbitrary and capricious manner in violation of existing law dictate that a check rein be kept upon them. Schwartz v. Urban Redevelopment Auth., 411 Pa. 530, 536, 192 A.2d 371, 374 (1963); Keystone Raceway Corp. v. State Harness Racing Comm., 405 Pa. 1, 5, 173 A.2d 97, 99 (1961). These considerations dictate that the independence of authorities from some of the usual restrictions on governmental activity not be extended so as to insulate them from judicial scrutiny through the medium of taxpayers' suits.' (Emphasis supplied; footnotes omitted.)

The authority in the instant case is 'a public body, corporate and politic, exercising public powers of the Commonwealth * * *.' Act of May 28, 1937, P.L. 955, § 10, 35 P.S. § 1550. Its property is exempt from most taxes. Act of May 28, 1937, P.L. 955, § 23, 35 P.S. § 1563. To the extent that the activity of the Philadelphia Housing Authority creates tax exempt property, which benefits from the provision of municipal services it would seem that the taxpayer has a pecuniary interest in seeing that its functions are not improperly conducted. Cf. Price v. Philadelphia Parking Auth., supra, 422 Pa. at 325--327, 221 A.2d at 143--144. Moreover the Philadelphia Housing Authority is empowered to agree to make payment to the City of Philadelphia in lieu of taxes for 'improvements, services, and facilities', so long as such payments do not exceed the cost thereof to the City, Act of May 28, 1937, P.L. 955, § 23, 35 P.S. § 1563, and that such an agreement has in fact been made. This fact emphasizes the taxpayers' interest in the operation of the Housing Authority, since the misuse of funds jeopardizes the Authority's ability to make the agreed upon payments 'in lieu of taxes.'

Appellees urge that White v. City of Philadelphia, 408 Pa. 397, 184 A.2d 266 (1962), in which we rejected a taxpayer's claimed standing to enjoin the City, School District and Housing Authority of Philadelphia from enforcing an ordinance empowering the Authority to purchase and rehabilitate selected non-contiguous properties precludes us from finding standing here. We believe, however, that this Court's broadened philosophy of standing outlined a few months ago in Price v. Philadelphia Parking Authority, supra, supercedes White and that a denial of standing to appellant Faden here would be in conflict with the Price philosophy. We therefore overrule White insofar as it is inconsistent with the decision here.

Much the same reasoning we have used to deal with the appellees' reliance on White applies...