Opinion
May 23, 1938.
June 30, 1938.
Courts — Supreme Court — Original jurisdiction — Equity — Threatened, continuing trespass.
1. Original jurisdiction was taken by the Supreme Court of a suit in equity by a public service company to restrain the mayor and other officials of a municipality from interfering with plaintiff's property, and a decree was entered granting an injunction, in the circumstances disclosed by the record, where it appeared that the mayor had publicly threatened to seize property in the possession of the company under a lease which had not been lawfully terminated by the city and to exclude plaintiff therefrom, by force, if necessary, and where the character of plaintiff's operations and the necessity of supplying, without interruption, enormous gas consumption required by the residents of the municipality, indicated the probable magnitude of damage which would result to plaintiff and to residents of the city if the threatened trespasses were not restrained. [341-60]
Equity — Jurisdiction — Injunction — Continuing trespasses — Accounting — Determination of other matters — Jury trial — Constitutional law.
2. An injunction will be granted to restrain threatened unlawful trespasses of a continuing character, particularly where the amount of threatened harm is of great magnitude both to the plaintiff and to the public in general. [356-7]
3. Where a court of equity has properly taken jurisdiction of a case in which an injunction is sought and a complicated accounting required, the court will itself proceed to round out the whole circle of controversy by deciding every other contention connected with the subject matter of the suit, and such jurisdiction does not violate Article I, Section 6 of the Constitution, which provides that "trial by jury shall be as heretofore and the right thereof remain inviolate." [358-9]
Constitutional law — Due process — Original jurisdiction of Supreme Court — Pending suit in lower court involving same issues — Removal to appellate court.
4. The fact that the disposal of a case of original jurisdiction by the Supreme Court may control the disposition by a lower court of a pending suit in equity in that court, involving substantially the same facts and issues, does not constitute a want of that due process of law required by the federal and state constitutions. [358]
5. The Supreme Court has power to remove a pending equity suit from a lower court and dispose of it. [357]
Mr. Chief Justice KEPHART and Mr. Justice SCHAFFER did not hear the argument and did not participate in the decision.
Argued May 23, 1938.
Before MAXEY, DREW, LINN, STERN and BARNES, JJ.
No. 437, Miscellaneous Docket No. 6. Petition to take original jurisdiction of bill in equity, and bill in equity, in case of The Philadelphia Gas Works Company v. The City of Philadelphia, S. Davis Wilson, Mayor, et al. Rule to show cause why original jurisdiction should not be taken made absolute; decree entered granting injunction.
REPORTER'S NOTES:Pursuant to the order of reference quoted below, President Judge FINLETTER of Court of Common Pleas No. 4 of Philadelphia County filed his report from which the following is quoted, as directed by the court:
"On January 6, 1938, the petition and answer in the above mentioned proceedings were referred by the Supreme Court to the undersigned to 'hear the evidence, determine the facts, make findings thereon, and report to the Court.' . . .
"We have heard the evidence and herewith submit our findings of fact. . . .
"The gravity of the instant case, involving as it does the interests of the community, the manufacture and supply of a commodity essential to the daily life and comfort of thousands of homes and industries, the probability of serious and irreparable injury to the Gas Works of the city, worth millions of dollars, and to the property of the Company, and to the persons and property of consumers of gas throughout the city, all demand the consideration of the highest court of the State.
"It will be conducive of clearness if we preface our Report with a statement of the pleadings and the factual issues raised.
"THE PLEADINGS. These consist of plaintiff's Petition and defendants' Answer.
"The Answer includes three exhibits, the first and second being reports of the City Controller, in which that officer makes surcharges against the plaintiff under headings which we will note later. The third exhibit attached to the Answer is a bill in equity in which the Mayor and the City of Philadelphia are plaintiffs, and The United Gas Improvement Company, The Philadelphia Gas Works Company and the Gas Commission are defendants. This bill recites the same surcharges as those made in the Controller's Reports. The pertinency of these subjects is asserted by the defendants in the Supreme Court proceedings on the theory that if the surcharges are well founded, the sums claimed to be due amount to a set-off for the benefit of the City of Philadelphia against the claim of the Company for reimbursement of sums paid by the Company for betterments, additions and extensions of the plant. So that, if there is, by the application of these surcharges, no sum due for betterments, then the lease was terminated by the mere notice to terminate without the necessity of making any payment to the Company.
"The Company denies that anything is due as a matter of fact, and further claims that even if the facts are as asserted, no right of the set-off exists for the benefit of the City.
"It is plain to us that under the terms of the reference we must determine the facts involved in all these subjects.
"THE ISSUES RAISED by the pleadings are:
"1. Did the Mayor intend to take forcible possession of the plant?
"2. Was there any sum due on December 31, 1937, for 'betterments' which should have been paid to the Company to consummate the termination of the lease?
"3. Was there any sum due by the Company under any of the following heads?
"(a) Excess cost of purchasing gas from the Philadelphia Coke Company over the cost of producing water gas in the municipal plant?
"(b) Were pensions and separation allowances improperly paid?
"(c) Were wages paid for unduly long vacations?
"(d) Was the charge of six per cent paid to the Company upon its cash capital contributions, too large? And should payments be computed at current market prices of loans?
"(e) Was there a loss on the sale of appliances for the use of gas, such as ranges, hot water boilers, refrigerators and the like. And, in this connection, was money improperly spent for the acquisition of new business?
"(f) Was the sale of tar to the 'Ugite' Company improper?
"(g) Was the rental of certain buildings by the Company too high?
"(h) The United Engineers and Constructors, Inc.
"(i) Street lighting by the Welsbach Company.
"1. The threat of forcible seizure of the plant by the Mayor.
"The facts in this connection are found in the pleadings and proofs.
"The 16th paragraph of the petition alleges:
" 'That S. Davis Wilson, Mayor of the City of Philadelphia, has publicly and emphatically stated on a number of occasions that, in his capacity as Mayor, he will, on January 1, 1938, take physical possession of the Philadelphia Gas Works, remove its management now under the control of the Philadelphia Gas Works Company, and place it under his personal operation as executive head of the City Government.'
"The answer asserts in detail the City's right to possession of the Works, the termination of the lease, the provisions of the City Charter that the supply and distribution of gas shall be under the Mayor, and that he is entitled to immediate possession.
"He denies in the answer that he has any intention of taking possession by physical force, but alleges that he is asserting a 'technical possession' to preserve the City's rights in an action of ejectment.
"It will be noted that he makes no express denial that he publicly and emphatically stated his intention to take physical possession of the Works, remove its management and place it under his personal operation. Following that, and while these proceedings were in progress, he issued a Proclamation, which even more emphatically asserted his right to possession of the Works, and added his intention to prepare and use an armed force.
"What were his intentions when he made the threats charged? He says now that he intended only a formal demand of possession, to be made the basis of a future action of ejectment, an act that could have been done by a visit to the plant of a single messenger.
"This is totally inconsistent with his proclamation, which recites nothing else than a seizure of the Works. If he had intended only a formal letter, what necessity was there for declaring an 'emergency,' requiring a public and extraordinary call for special policemen, in addition to the 4,000 policemen already in the City's force? This, under a provision of the City Charter which deals with 'any emergency or apprehension of riot or mob.' How could the visit of the Mayor's messenger with his formal letter raise a riot or call for the Mayor 'taking command' of the police force and 'as many special policemen as he may deem advisable'?
"We think it plain that the Mayor intended to take possession of the Works by force. . . .
"Whether or not the lease was terminated on December 31, 1937, the threat to take over the property by force was a threat to commit a trespass which, if carried out, would necessarily be a continuing one. . . .
"If the lease had not been terminated (and in our opinion it had not), there was not the shadow of a right to enter peaceably or forcibly. . . .
"2. Was there any sum due on December 31, 1937, to the Company for 'betterments'? . . .
"Termination of the lease by the City could be had at the expiration of any ten-year period, by giving eighteen months' written notice to the Company and payment by the City to the Gas Company of the expenditures made by the Gas Company for 'betterments, extensions, improvements and additions to the Gas Works in respect to which it has not already been reimbursed.' The lease contemplated the need of 'betterments, extensions, improvements and additions' to the plant to keep pace with the growth of the City.
"Was anything due on December 31, 1937, to the City on account of unpaid 'betterment' expenditures?
"Clause 2-A provided for the termination of the lease by the City. To exercise this right it was provided that eighteen months' notice of such intention be given by the City, and payment made for any balance due to the Company for betterments. A proper notice was given but no payment was made of the balance of $288,179.70 due to the Company for betterments. We have found it to be a fact that the sum named was due and unpaid by the City on December 31, 1937.
"The controversy in that connection is this: The City admits that this sum was due, but contends that it is offset by an item, exceeding that amount, which is carried as a reserve for contingent and other liabilities that must be paid by the Company in the future. For example, one of the reserves is of a sum necessary to meet tort obligations, now unliquidated, and impossible at this time of liquidation. This criticism was made for the first time at the hearing before us. It is not now objected to on principle, but only because it is not expressly recognized in the lease as an item of expense. We cannot recognize any such finespun objection. It is plainly an operating expense. In the operation of such an enterprise as a gas-making business, accidents injurious to customers and others and claims based on them cannot be ignored, and since the liability cannot presently be liquidated, reserves must be maintained to meet them. Another reserve is one which is set aside to meet the cost of replacement of wornout or partly wornout transportation equipment. The City, as we have said, recognizes the principle involved, and has offered no proof that the amount reserved is excessive. Indeed the only comment on this subject in the proofs is that of the Maltbie Associates, an auditing firm employed by the City, who criticized the reserves as 'too small.' We may add that the item in question has been included in the Company's book accounts during the last ten years, without objection by any of the officials who have examined the books.
"In this connection a request for finding of fact is made by the City calling attention to the fact that the balance sheet for the final year of the lease contains an item of $1,050,000 due the City by the Company for the last instalment of the annual payment to the City out of the earnings of the plant. Counsel has failed to note that the credit side of the balance sheet exceeds the total debits, including among the latter $1,050,000, by $288,179.70, which is still due by the City. Finally, the sum in question was not due on December 31, 1937.
"We find therefore as fact that the Reserves are properly treated and cannot be set off against the $288,179.70 due for betterments.
"Was the City bound to tender the amount or could it await demand by the Company? As a rule the debtor must seek the creditor. In addition, the right to terminate depended on two facts; notice and payment. The burden is upon the City to show the existence of both facts. As a matter of fact the City had as much knowledge of the subject as the Company. Its auditors had been working on the books for weeks.
"On December 14, 1937, counsel for the Company stated to Council that about $300,000 was due on that day — a fairly close estimate with two weeks more of the term to run. Finally it is now evident that the City intended to pay nothing, for it had taken the position, and still maintains it, that nothing was due.
"3 (a) to (h). If the ruling of the Supreme Court in Greensburg Boro. v. Pub. Serv. Com., 268 Pa. 177, 181, 182, is applicable to the instant case, there is no need of considering the several claims of set-off which we are about to discuss. But since the principal purpose of the reference to us is the ascertainment of the facts, we regard a consideration of these subjects to be pertinent, apart from our own opinion of the legal question involved.
"In Greensburg Boro. v. Public Service Commission, 268 Pa. 177, above referred to, the water rates, after protracted litigation, had been fixed on August 1, 1918, to be effective as of January 1, 1914. The rates finally fixed were less for small consumers than those of 1914. Pending the litigation the small consumers paid at the higher rates of 1914. The boroughs were indebted to the Water Company and sought to have the overpayments made by the small consumers credited on the debts due the boroughs. This was denied by the Supreme Court who approved the statement of the Superior Court that such a proceeding would be confiscation of the small holders' rights.
"It is the contention of the City, in the instant case, that if the surcharges are sustained, as existing in fact, they should be credited upon the debt due by the City to the Company for betterments and additions to the plant. This is totally inconsistent with the theory of the lease, which is that the annual gas rate shall be based upon the earnings of the plant, for the benefit of the consumers. In other words, the surcharges, if well founded, should be paid into the fund for the purpose of reducing the succeeding year's gas rate, and not to the City, or for the benefit of the City. The question is not raised by the facts because we have found as a fact that the so-called surcharges do not exist. They are as follows:
"3 (a). The Koppers Contract. It is claimed by the City that the making of a certain contract was unbusinesslike and improvident. This was a contract with the Philadelphia Coke Company, or Koppers Company, for the supply of coke oven gas to the Gas Works. That the City is in no position to make such a criticism is evident when it is known that it, by ordinance, authorized such a contract to be made, and then, after careful examination by its own experts, approved the particular contract in question. It certainly does not lie in its mouth to criticize the other party to the contract for doing what it expressly approved.
"The details may be summarized as follows:
"For some years before the date of the present lease the increase in the capacity of the existing plant, to meet anticipated demands for gas, was under consideration. Additions to the existing water gas plant, and purchase of coke oven gas, were considered. Clause 4 of the present lease provided 'that the right to purchase by-product i. e., coke oven gas, in substitution for gas produced at the Gas Works,' is given to the Company if such purchase is 'recommended by the Gas Commission and approved by Ordinance of City Council.' On June 12, 1926, a Resolution of City Council, approved by the Mayor, authorized the Mayor to engage an expert engineer to study the subject of by-product coke oven gas, and draw specifications for its supply to the Works. The Mayor employed a well-known gas engineer, William Hutton Blauvelt, to take care of the City's interests, and prepare specifications for the supply of coke oven gas, and to invite bids from persons willing to establish a coke oven plant and supply gas to the Gas Works. Bids were asked by advertisements and four received, among them one by the Koppers Company. The Mayor, on April 28, 1927, referred the matter to the Gas Commission for investigation. The Commission recommended the acceptance of the Koppers bid. The report of the Commission was transmitted by the Mayor to Councils, together with a statement of the Mayor's concurrence with the Commission. Public hearings were conducted by Councils.
"On December 30, 1927, City Councils by ordinance, specifically referring to Clause 4 of the lease, the reports of the engineers and the recommendations of the Commission, consented to the purchase of 'by-product coke oven gas in substitution for gas which would otherwise be produced at the Gas Works.'
"In other words, from the beginning the City had knowledge of the purchase of coke oven gas, approved it, and examined the subject carefully by its own engineers employed for the purpose, permitted it by Clause 4 of the lease, approved it by its Councils, Mayor and the Gas Commission, and this not hastily but after careful examination. It is in no position now to criticize the Company for doing what it, itself, approved.
"What we have said about the contract to sell coke oven gas applies also to the contract made the same day for the purchase of coke. It is clear from a reading of the documents relating to the Koppers Coke Company transaction that the sale of both gas and coke was involved in the negotiations, and in the investigations made for the City by Mr. Blauvelt. Both products are produced from a single refining, and the price of one is necessarily involved in the price of the other. This may be the reason why no specific reference is made in the pleadings, either the Equity Bill or the so-called 'surcharges' of the Controller.
"3 (b). Pensions and Separation Allowances.
"It is the custom of the Company to pay pensions to its employees after their retirement for age. Such payments are of the nature of deferred wages. It is unnecessary to defend the principle of pensions from either an economic or humanitarian standpoint. They are due to skilled and faithful employees. But it is objected that the years of service by the employees which define the right to pension should not include service to other companies. It seems to be unimportant where the workman gains his skill. His services are made valuable to his employer no matter where gained. Counsel speaks of his pension 'being based on his service with other companies.' It is rather based on his experience no matter how gained. No employee of any company other than The Philadelphia Gas Works Company had been paid a pension, but employees of The Philadelphia Gas Works Company having experience and skill gained by years of service in Gas Works, are recognized as entitled to higher wages in the form of pensions.
"The fact is that some men who have spent their lives working for the City Gas Works, four actually who worked there when the old Gas Trust was in charge, were still working there when the present lease was executed and continued to work for the present lessee. It would be unjust to such men to have their right to a pension taken away because the title of the property was shifted from one corporation to another, which is in fact wholly owned by the former. The workmen know nothing of leases and assignments of leases. They know they have spent their lives in service of the 'Works' and they look to the 'Works' to care for them in their old age.
"Of course the present Company cannot and does not pay pensions to men who were never in its employ.
"The United Gas Improvement Company pays all pensions granted prior to January 1, 1928, when the present lease went into effect.
"The separation allowance is a sum allowed to a workman who is leaving the Works, to tide him over until he gets a new employment. We regard however such payments, and the payment of pensions to faithful employees, as based on sound business judgment, conducive to satisfactory service to the Company and the customer by contented workmen. We may add that although pensions have been paid and have appeared regularly for the last ten years upon the books of the Company, none of the auditors for the City has objected to their payment except the present Mayor.
"3 (c). Wages paid for unreasonably long vacations. This objection was not pressed.
"3 (d). Payments of interest on capital invested by the Company.
"The contention of the City is that payments of money for capital invested by the Company should not be at the rate of six per cent, but only at rates fixed by the current money market. But that is not the provision of the lease. As we have stated above, the lease provides for the payment of seven per cent to the City for the use of its plant, and payment 'of interest' to the Company for the use of its cash investment. There being no other definition of 'interest' than we have indicated, it is plain that the lawful rate of six per cent was meant.
"3 (e). Loss on sales of appliances, and 'New Business' expenses.
"The 'appliances' referred to are gas ranges, hot water boilers for domestic use, refrigerators and the like. As a matter of fact there was no loss on this head. That is, the appliances were sold at a profit, considering their mere purchase and sale. Considering the benefit the Gas Works got from their use in the additional output of gas, there was great profit.
"There is however the additional complaint made by the City that the 'New Business' department has been an unprofitable investment. It is pointed out that the annual expense, $500,000, did not show results in keeping with the costs.
"The facts in this connection are that the business of making and selling gas is a highly competitive one. Gas is used now, not only as an illuminant, but also as a fuel, and comes into competition with electricity, oil, and coal, which, if not met with competition, would crowd gas out of the business. This is recognized throughout the country, and the evidence shows that in most of the large cities a 'new business department' is maintained at even greater cost than in Philadelphia. To meet this competition, the Company, believing that it pays to advertise, has spent large sums in newspaper advertising, and in the maintenance of a force of salesmen, expert in the use of gas appliances for domestic and commercial purposes; in other words, it has spent money, necessarily, we think, in propaganda for the use of gas. It is no answer to this to point out that the returns do not show a corresponding increase in sales. The answer is that if the efforts had not been made to increase, the results would show a decrease. Some evidence of the results will be found in Ex. D-1, which shows an increase of hot water heaters from 28,000 to 60,000; gas refrigerators increased from 100 to 24,700; 400 house heaters increased to 4060. (See N. of T. p. 765.)
"3 (f). Sales of by-products, and particularly sales to the Ugite Sales Company.
"In making water gas, which was the sort of gas produced at the City Works, there are by-products, among them raw tar, and this, by further distillation and processing, may be converted profitably into many marketable substances. The Gas Company accordingly has processed as much of its tar as could thus be disposed of. Among the residual products was a road-making substance called by the copyrighted name of 'Ugite.' There are many other processed substances. These latter may be grouped together for present purposes. For the first two years of the lease all processed by-products were sold through an agency arrangement with the Ugite Sales Company, on a commission of somewhat less than fifteen per cent. This plan was then abandoned, and the Gas Works established its own sales department which sold all other residuals than Ugite. The Company sold tar processed as 'Ugite' direct, under successive contracts, to the Ugite Sales Corporation. The City alleges that this amounted to a diversion of profits to The United Gas Improvement Company, which company owned all of the stock of the Ugite Sales Company. If it did, of course, the Company should be debited with any such profit. As a matter of fact the evidence shows that the Ugite sales were very profitable to the Gas Works, and there is no proof that more profitable sales could be made to others or for other purposes. Comparing sales of Ugite with sales of all other processed materials, the sales of the latter realized an increase in return, over the value of raw tar, of 2.95 cents per gallon, while the Ugite sales gave an increase of 4.27 cents per gallon over the value of raw tar. There is no proof whatever that higher prices could be obtained from any other purchaser than from the Ugite Company. Indeed as we have said, the sales for other uses brought much lower prices.
"It was plainly therefore 'good business' to sell as much of the raw tar in the form of Ugite as could thus be sold.
"3 (g). Rental of certain buildings.
"Objection is made to the rate of rental of two buildings, the one at Ninth Street and Montgomery Avenue, and the other at Sixth and Duncannon Streets. When the present lease was executed the Company arranged with the United Gas Improvement Company to have two buildings constructed by that Company on these lots for the use of the Gas Company. They were designed so as to be especially adapted for the use of the Gas Company, during the ten-year lease. The erection and leasing of these buildings is not complained of, and could not be, if for no other reason, because their use resulted in a saving of approximately $250,000 a year. It is also a fact that their use permitted the centralizing of the plant, and added to the efficiency and facility of management and operation.
"The only criticism that is made in this connection is that the rental is said to have been too high. It was at the rate of 86 cents per square foot for the large building and one dollar for the smaller building. It was arrived at on a basis of ten per cent of the cost of the buildings and lots, and this amount was reached by allocating six per cent to capital invested, two per cent to repairs, and two per cent to amortization. The latter item is obviously too low, because it would take fifty years to complete the amortization, whereas the lease was for but ten years. The reasons for fixing the rental are not important. The real question is whether the rental was too high. It would seem that it should be fairly easy to establish this fact in view of the many dealers in such buildings, who would know the current market price. The City however contented itself with calling a single witness who had never been inside the building, and who paid no regard to the fact that the building had been planned to meet the special requirements of the Gas Works. In our opinion the objection has not been sustained by adequate proof.
"Several of the requests of the Respondent for findings of fact deal with the willingness of the petitioner to recognize, in making the new lease, the decrease in value of the buildings, due to the past ten years' use. We do not see the pertinency of this offer to an interpretation of the old lease, or to the rental value of a new building ten years ago.
"3 (h). Construction work done by the United Engineers, Inc.
"This refers to a relatively small amount of work done by this Company for the Gas Works. The work was done practically on a ten per cent plus cost basis. No complaint is made of excessive profit. Indeed the proofs show the contract price to be less than what was charged by the contractor to other persons. The City however suspects that something is wrong about the matter (it does not know exactly what) because the Engineers Company is wholly owned by The United Gas Improvement Company. Its suspicions are plainly without foundation, for it is a fact that the total amount of work done by the Engineers Company for the Gas Works in ten years was less than one-fifteenth of one per cent of the work done by the Engineers Company. It is also a fact that the items involved appeared openly on the books of the Gas Company and were known to the City's auditors when they periodically examined the books.
"3 (i). Street lighting by the Welsbach Company.
"Under Clause 11 of the lease the Gas Company agreed to 'furnish gas to the City in its buildings, and in street lamps . . .' and 'to furnish and install as required by the City, light, clean, extinguish and repair all lamps and lanterns and burners and maintain them at rates to be fixed by the Gas Commission, which shall not be less than the cost of service.'
"In this connection the City is simply a customer of the Gas Company, which supplies it with gas, and services, that is, delivers it to the City, in its buildings and in its street lamps. This relation is governed by successive contracts between the City and the Gas Company. The rate is fixed, under the contract, by the Gas Commission. There are three items entering into it: first, the price of gas; second, a credit to the Gas Company for use of its mains to deliver the gas to lamp-posts; third, the price paid the Welsbach Company for servicing the lamps, that is lighting them, cleaning them and keeping them in order, repairing and replacing them. This last is fixed by the contract between the two companies. Objection is made by counsel for the City that the price is extravagant. The fact is that the contracts between the City and the Gas Company, fixing the price on the basis of the three items set forth above, in which the payment to the Welsbach Company was expressly set out, were presented to the Gas Commission, who approved them and sent them to the City. They were then signed by the Mayor and approved by the City Solicitor. The Public Service Commission also approved them.
"The City cannot repudiate the contracts or object to the prices fixed, after its repeated approvals of them.
"In view of what we have just said it is perhaps unnecessary to go into details of the cost of lamp servicing under the old lamplighter plan, and that under the modern 'clock lamp' plan; or into the alternative plan of servicing directly by the Gas Company, which have been discussed in the proofs.
"The latter subject was considered by the Gas Company in 1927, when the contract made in 1916 for a term ending 1928, was about to end. A careful estimate was made of the cost of the Gas Company itself doing this work. It was found that the necessary plant would cost about $500,000. In the exercise of a business judgment the Company thought it unprofitable for the City to install its own plant at such an outlay. No substantial criticism has been made of its decision. Our own opinion is that it was good judgment.
"The relative costs of the lamplighter plan and the clock plan were discussed in the proofs.
"It appears that the price of servicing lamps was fixed by contract made in 1916 and terminating on December 31, 1927, at $11.75 per lamp. While the contract was in force, that is between 1916 and 1927, no change could be made. In 1928 it was fixed at $15.00. In 1931 at $14.25 and $13.00. In 1932 at $13.00; in 1933 to 1936, $12.00, and in 1937 at $11.95.
"The cost of labor as affecting the price was discussed in the proofs. It had increased 100 per cent between 1916 and 1928, accounting for the 1928 rate of $15, compared with the 1916 rate of $11.75. Since then the price fell each year until now it is $11.95. Plaintiff's Exhibit 24 shows the annual cost of servicing the lamps to run from $565,939 in 1929, in decreasing amounts each year until, in 1933, it was $271,940. There is no testimony to show that these prices are in any way extravagant, except it is said there was less labor in attending to lamps which are equipped with the clock device than by using the old lamplighter plan. Counsel for the City suggests 'that if the lamplighter' is eliminated by the 'clock' the cost of the lamplighter's wages is gained. Unfortunately for this argument the clocks require winding, and get out of order, mantles get dusty and inefficient, globes get broken, and daily inspection must be made. It does not lessen the labor bill if the 'lamplighter' is called an 'inspector.' We cannot agree that there is any extravagance in the charge for servicing lamps.
FINDINGS OF FACT."We are therefore of opinion and find as facts:
"(a) That S. Davis Wilson intended to take possession of the Works by force.
"(b) That reserves to meet future and contingent liabilities were properly set up and were not excessive.
"(c) That a balance of $288,179.70 was due by the City to the Company for betterments and additions to the plant, and was not paid.
"(d) That such payment not having been made the lease was not terminated and is still in force.
"(e) That the Company is not indebted to the City or to the Gas Rate Fund.
"(f) The City cannot now object to the Koppers contract because it expressly, and after long and careful examination, authorized it to be made.
"(g) The rate of interest in capital investment was fixed by the lease at seven per cent to the City on the value of the plant, and six per cent to the Company on its capital invested.
"(h) The pensions to employees on the basis of their experience and skill were properly paid.
"(i) That sound judgment required advertisements and propaganda to obtain New Business.
"(j) That sale of tar processed into Ugite resulted in high profits, and that there is no proof that more could have been made by other disposition of the tar. And that the Company owes nothing on this account.
"(k) That the charges for servicing street lamps were reasonable and approved by the Gas Commission and the City, and that the Company owes nothing to the City on that account."
In dismissing the exceptions filed, President Judge FINLETTER said: "Nothing new was presented in connection with Exceptions 1 to 11 inclusive, and they are, on reconsideration of the subjects involved, dismissed.
"The 13th exception relates to a bill in equity pending and undecided. [This refers not to the bill and answer now being considered by this Court, but to a proceeding pending in Court of Common Pleas No. 4.] Complaint is made in that exception to our alleged 'disposition of the questions of fact and conclusions of law contained in the bill' without affording the plaintiffs their right to a trial under the equity rules. Also, in the 14th exception, to our 'prematurely finding the final and conclusive facts in the bill in equity.' And in the 15th exception to our finding the facts and determining questions of law in the bill in equity. And in the 16th exception to our finding conclusively against the City facts which were sub judice in the equity suit.
"Counsel for exceptants has forgotten or ignores the fact that two separate and distinct proceedings were pending, the one, those under the petition to the Supreme Court to take original jurisdiction, the other a bill in equity pending between substantially the same parties. It happens that both proceedings involve in large part the same facts. They are nevertheless separate and distinct proceedings, the one before us under the mandate of the Supreme Court, and the other by agreement of the parties, submitted to us as a trial judge in the equity suit.
"The proceedings under the Supreme Court mandate were plainly more pressing than the equity suit, which had been permitted by the parties to linger undisposed of for two years. We therefore filed our report in the Supreme Court matter first, as a separate and distinct proceeding.
"The parties, as we have said, having agreed to submit the equity trial to us as trial judge upon the testimony already offered in the Supreme Court proceedings, and having formally closed their testimony in the equity suit, it is our purpose hereafter to proceed with the disposition of the equity trial, make and file our findings and conclusions, and, if exceptions are filed, to have them heard by the Court in banc, consisting of our colleagues and ourself in the customary way.
"It is true that, speaking for myself, it is quite likely that the same findings of fact will be made as were made on the same subjects when they were at issue in the Supreme Court proceedings. We do not, again speaking for ourself, make any such commitment. But certainly no judgment can be given without the consent of the three members of the Court in banc. Counsel is entirely wrong in his assumption that the report and findings in the Supreme Court are premature adjudications of the issues in the equity suit.
"We take this opportunity to correct some typographical errors in our report. We called the 'United Engineers and Constructors Inc.' 'The United Engineers and Contractors Inc.,' and we misquoted the name of the 'Welsbach Street Lighting Company of America.' We also said that both these companies were wholly owned by The United Gas Improvement Company. The fact is that none of the stock of the Welsbach Street Lighting Company of America and only one-half of the capital stock of the United Engineers and Constructors, Inc., was owned by The United Gas Improvement Company at the time of the occurrences complained of in the copy of the Bill of Complaint attached to Respondents' Answer as Exhibit 'C.'
"All of the exceptions are dismissed."
Wm. Clarke Mason, with him Thomas B. K. Ringe and Morgan, Lewis Bockius, for petitioner.
G. Coe Farrier, with him Herman N. Schwartz, Assistant City Solicitors, and Joseph Sharfsin, City Solicitor, for respondents.
Two matters are for consideration: first, is this a case of which the court should take original jurisdiction? If it is, a second question must be answered: shall the injunction be granted?
The Philadelphia Gas Works Company asked the court to take original jurisdiction in an emergency produced by threats publicly made by the Mayor of Philadelphia followed by his Proclamation, in effect, declaring forfeiture of property rightfully in petitioner's possession and his intention to seize it and exclude petitioner therefrom, with force, if necessary. The petition was filed on the morning of December 31, 1937, following reported public declarations alleged to have been made by the Mayor, to the effect that he would on that day take possession of petitioner's property. Petitioner gave notice to defendants that the petition would be presented and that application for a rule to show cause and for a restraining order would be asked for. Counsel for the petitioner in the presence of the city solicitor, who had accepted service on behalf of defendants, appeared before a majority of the members of the court and formally presented the petition. Counsel for both sides were heard. When the hearing began the Mayor had not yet issued his Proclamation, but before the hearing was concluded, the Proclamation was promulgated. A rule to show cause why the court should not take original jurisdiction of the proceeding was granted, with an order restraining defendants from interfering with plaintiff's property pendente lite; defendants were directed to answer and the application was set down to be heard January 6, 1938. Defendants filed an answer from which it appeared at the argument that issues of fact were raised. The court accordingly referred the petition and answer, together with plaintiff's bill in equity, which had been made part of the petition, as the suit of which the court was asked to take original jurisdiction, to Honorable THOMAS D. FINLETTER, President Judge of Court of Common Pleas No. 4 of Philadelphia County "to hear the evidence, determine the facts, make findings thereon and report to this court." The learned judge, with characteristic care and thoroughness, heard the parties and the evidence presented by them and prepared his report. Though not required to do so by the order of reference, he exhibited his report to the parties with leave to file exceptions. Defendants filed exceptions which, after hearing, were dismissed; his report, together with his action on the exceptions, was then filed in this court. Defendants were directed to file an answer to the bill which had been made part of the petition, and the entire proceeding was ordered for argument May 23, 1938. Counsel were informed that argument would then be heard on the whole case, i. e., on the rule to show cause why original jurisdiction should not be taken of the cause set forth in the bill and also on the merits of the bill and the answer to it; this procedure was adopted because the bill in equity contained the same averments as the petition for the rule, so that there was no reason why two arguments should be heard, one on the rule and one on the bill and answer. The case was then fully argued and has since been duly considered; all the members of the court who heard the argument agree that the rule should be made absolute and that, on the merits of the bill and answer, an injunction should be granted as prayed for.
Pursuant to Article V, section 3, Constitution of Pennsylvania: Wheeler v. Philadelphia, 77 Pa. 338, 344; Wentz v. Philadelphia, 301 Pa. 261, 151 A. 883; Wilson v. Philadelphia, 319 Pa. 47, 179 A. 553; Kelley v. Baldwin, 319 Pa. 53, 179 A. 736; Turco P. V. Co. v. Kalodner, 320 Pa. 421, 184 A. 37; Kelley v. Earle, 320 Pa. 449, 182 A. 501.
"Now, January 6, 1938, the within petition and answer are referred to the Honorable THOMAS D. FINLETTER, President Judge of the Court of Common Pleas No. 4, of Philadelphia County, to hear the evidence, determine the facts, make findings thereon and report to this court. The restraining order made by this court in the above entitled case on December 31, 1937, shall continue in effect until the final disposition of the motion by this court. The bill in equity and the injunction affidavits filed in the above entitled case shall likewise be referred to President Judge FINLETTER for such action as this court shall further direct."
The Proceedings before him occupy 902 printed pages of the record and we are advised by one of the briefs the hearing occupied approximately three weeks.
We have considered the brief filed on behalf of defendants with the learned judge, a copy being supplied at the argument.
Compare Cooke v. Boynton, 135 Pa. 102, 19 A. 944; Easton Pass. Ry. Co. v. Easton, 133 Pa. 505, 19 A. 486; Tide Water Pipe Co. v. Bell, 280 Pa. 104, 124 A. 351; Sterling v. Constantin, 287 U.S. 378.
The petitioner and plaintiff is the Philadelphia Gas Works Company, assignee of the United Gas Improvement Company, lessee.
The defendants are The City of Philadelphia, a Municipal Corporation; S. Davis Wilson, Mayor; Martin J. McLaughlin, Director of Public Works; Andrew J. Emanuel, Director of Public Safety; and Edward Hubbs, Superintendent of Police.
The averments of the petition and bill on the one hand, and of defendants' answers to the petition and to the bill on the other, sufficiently appear in the excerpt from President Judge FINLETTER'S report, contained in the Reporter's Statement of the case, attached to this opinion.
The subject of the litigation is the possession and operation of the Philadelphia Gas Works which, briefly, is a plant for the manufacture and distribution of gas to residents of Philadelphia. "The gas works," as MITCHELL, J., said, in Baily v. Phila., 184 Pa. 594 (1898), "are the property of the city of Philadelphia, not as a municipality, but as a business corporation."
Various aspects of the ownership and operation of the Gas Works have been the subject of litigation from time to time: Western Saving Fund Society v. Philadelphia, 31 Pa. 175 and 185 (1858); Wheeler v. Philadelphia, 77 Pa. 338 (1875); Baily v. Philadelphia, supra; Ferguson v. Public Service Commission, 82 Pa. Super. 238 (1923); Wilson v. Public Service Commission, 116 Pa. Super. 72, 176 A. 510 (1935).
By a lease or operating agreement the United Gas Improvement Company (hereafter called the Improvement Company) had possession of and operated the Gas Works during the thirty-year term beginning in 1897 and ending December 31, 1927. Pursuant to city ordinance of February 5, 1926, a new lease or agreement was made by the City and the Improvement Company, for the period beginning January 1, 1928, but without fixing any definite term. The Improvement Company, with the approval of the City, in December, 1927, assigned the lease to petitioner, Philadelphia Gas Works Company. Clause 1 is in these words: "City does hereby lease to Gas Company, on the terms and conditions herein set forth, from and after January 1, 1928, all the property real and personal, collectively known as the Philadelphia Gas Works, it being understood and agreed that Gas Company shall pay any and all ground rents and the rental of any land, building or buildings, which may be used in connection with the operation of the Gas Works; and also pay all water rents or other charges for water which shall be used by the lessee upon the leased premises or any part thereof. All the foregoing payments shall be included as part of the operating expenses as herein provided.
The Public Service Commission, pursuant to the statute then in force, duly issued its "Certificate of Public Convenience", approving said contract. See Public Service Commission's Municipal Contract Docket No. 3475.
"The City does hereby authorize and empower Gas Company during this lease to retain possession of, maintain, change, alter, replace, repair and operate said Gas Works and appurtenances and all the property hereby leased; to lay, repair, remove, relay, extend and maintain mains, pipes, services and appurtenances along and beneath the surface of the highways, streets, avenues, lanes, alleys, ways and public places in said City, for the supply and distribution of gas; and Gas Company during this lease shall have the exclusive right for said purposes to enter upon and occupy all said highways, streets, avenues, lanes, alleys, ways and public places, and to supply and distribute gas through pipes laid therein: . . .
"City agrees that during this lease it will do nothing, by ordinance or otherwise, which will in any way interfere with or limit, restrict or impair this exclusive right hereby vested in said lessee, or the use and enjoyment of any of the property hereby leased, or such renewals, alterations, replacements, enlargements, additions, extensions, betterments or improvements as may be made thereto."
Clause 2, paragraphs A and B, dealt with the City's right to terminate in these words: "A. City shall have the right to terminate this lease on December 31, 1937, or at the expiration of any ten-year period thereafter by serving upon the President or Vice-President of Gas Company at least eighteen (18) months prior to the date fixed therein for termination, a written notice of the City's intention to so terminate this lease, duly signed by the Mayor or executive head of the City pursuant to an ordinance of City Council and by serving a similar notice upon any assignee of this lease: Provided, however, That said notice shall have the effect of terminating this lease only in the event and upon the condition that on or before the date fixed therein for termination, the City shall pay the Gas Company a sum or sums of money equal to the amount of expenditures made by Gas Company for betterments, extensions, improvements and additions to Gas Works in respect of which it has not already been reimbursed.
The decision turns on the existence or non-existence of a debt due by the City on this account.
"B. Gas Company shall have the right to terminate this lease on December 31, 1937, or at the expiration of any ten-year period thereafter, by serving upon the Mayor or other executive head of the City at least eighteen (18) months prior to the date fixed therein for termination, a written notice of the intention of the Gas Company, to so terminate this lease, duly signed by the executive officers of Gas Company, and such notice shall have the effect of terminating this lease on the said date fixed therein for termination, and the City shall thereupon take possession of the Gas Works.
"Upon any such termination of the lease by City or Gas Company, City shall have the option to purchase all coal, coke, tar, lime and other gas-making supplies and residual products then on hand at said Gas Works at the then market prices, or to have the said Gas Company remove the same at its own cost and expense as soon as can conveniently be done. All gas theretofore sold to consumers and not as yet paid for and all gas in the holders, mains and pipes of said Gas Works at any such termination of this lease by City or Gas Company shall be accounted for at holder cost by City to Gas Company when paid for by consumers and the City agrees to use all due diligence in the collection thereof: Provided, however, That if the Gas Company has already been reimbursed out of gas receipts or otherwise for any of the above, then it shall pass to the City upon such termination without any cost.
"Upon the termination of this lease in manner as aforesaid, Gas Company shall deliver to City the property herein leased, in the same good order and condition in which the same now is, and to such extent as said property shall not have been altered or changed under this lease by the additions, extensions, betterments and improvements made in and about the manufacturing and distributing systems and plants during this lease, and together with all such renewals, alterations, replacements, enlargements, additions, extensions, betterments or improvements to said Gas Works and the acquisition of additional property; together with the right to use all processes of every kind useful in the manufacture of gas then established and in use in any of said works; all of which shall be so delivered to City in good order and condition at such termination of this lease.
"All the changes, alterations, constructions, removals and repairs which shall be made from time to time in the proper maintenance, extension, betterment and improvement of the said Gas Works shall be made and done by Gas Company, and City shall receive the same, together with the said plants in an efficient state at such expiration of this lease, without any charge or cost to the City, except as herein provided. It is the intent of this lease that City, at the end of the term shall without charge or cost, except as herein provided, receive all of the said Works in the condition of alteration, improvement and change in which the same shall then exist, and the same shall be so maintained as to be then in good order and condition."
On or about March 13, 1936, the Mayor, pursuant to ordinance of council, notified the Gas Works Company of the City's intention to terminate the lease December 31, 1937.
It is at this point in the transaction that the essential difference between the parties appears. The Gas Works Company denied the efficacy of the notice and asserted that the City's right to terminate was conditioned on payment to the Company of sums expended by it for betterments and additions to the plant.
Pursuant to part of Clause A, quoted above: "Provided, however, That said notice shall have the effect of terminating this lease only in the event and upon the condition that on or before the date fixed therein for termination, the City shall pay the Gas Company a sum or sums of money equal to the amount of expenditures made by Gas Company for betterments, extension, improvements and additions to Gas Works in respect of which it has not already been reimbursed."
On the other hand, defendants admitted the conditional character of the City's right to terminate but insisted that "no sums were due to the Philadelphia Gas Works Company for such advances and expenditures," and that accordingly the termination was effective.
If nothing was due on the account specified, the termination became effective December 31, 1937; but if anything was due on that account, the City's intention to terminate was ineffective without payment.
Obviously, such an issue, one would think, could and would readily be determined by examination of the accounts required by the contract to be kept and which had, from time to time, throughout the years, been audited by the City's accountants. Instead of so determining it, what do we learn from the record? The Mayor insisted that the Gas Works Company was indebted to the City in a large sum composed of claims asserted under a number of headings; these claims he incorporated in the answer by reference to a pending proceeding in equity brought by the City in Court of Common Pleas No. 4, asking for an accounting based on the same claims. We quote from paragraph 15 of the answers stating defendants' position in this respect: "That, in addition to the said items of surcharge set forth in the Controller's Reports, as hereinbefore referred to, there are other sums due to the said City by the said Philadelphia Gas Works Company, all of which are specifically set forth in a certain Bill of Complaint filed by the City of Philadelphia against the United Gas Improvement Company, [and others] . . . in the Court of Common Pleas No. 4, as of December Term, 1935, No. 6464, which action is now pending and in which the City seeks an accounting of and to recover the amounts set forth in the surcharges appearing in the said Controller's Reports and for the further causes set forth in the said Bill of Complaint. A copy of the said Bill of Complaint is appended hereto, marked Respondents' Exhibit 'C' and made a part hereof."
President Judge FINLETTER'S report says: "As a matter of fact the City had as much knowledge of the subject as the Company. Its auditors had been working on the books for weeks." The evidence clearly supports that statement.
The City's equity proceeding, asking for an accounting, had not been tried (though under the rules, ample time for trial had passed) when the present proceeding began. Whether the existence of the asserted indebtedness to the City would have constituted a reason for not accompanying the termination notice with payment for betterments and additions, within the terms of the lease, need not now be decided because President Judge FINLETTER, in his report, specifically finds that when the notice was given March 16, 1936, nothing was due on account of those claims made by defendants in their answer to the petition or in the bill filed in Common Pleas No. 4, but that, on the contrary, the City was indebted to the Gas Works Company, and that on December 31, 1937, the amount due under the betterments clause was $288,179.70.
In view of a contention made in argument on behalf of the City, to be referred to later in this opinion, another fact about the trial of that equity suit may be stated now. The parties agreed, as we understand the record, that the trial to be conducted by President Judge FINLETTER to enable him to report to this court, should also be regarded as the trial of the equity suit pending in that court to the extent that evidence received in either could be relevant in the other. This was an appropriate agreement because the averments in defendants' answer to plaintiff's bill now before us, set forth the same facts in defense as were set forth in the City's bill in that case as the basis of the accounting decree against the Gas Works Company sought by the City in that suit.
See page 177a et seq. of Volume 1, Transcript of Testimony.
The effect of determining the issue of fact against the City, i. e., whether the City was indebted on an account required to be paid as a condition of terminating the lease as of December 31, 1937, was to leave the Gas Works Company in possession with the duty of continuing the operation of the plant as provided in the lease.
On December 31, 1937, the Mayor, in keeping with his threats to take possession of and operate the Gas Works, issued a Proclamation containing the following: "WHEREAS; There is not now existing any legal contract or lease providing for the operation of the Philadelphia Gas Works and there is no Councilmatic authority to operate the same after midnight today; and
Whether or not there was an existing contract was not a matter for the Mayor's decision; as has appeared, his decision was wrong.
"WHEREAS: Article VI, section 3 of the City Charter Act provides that the Department of Public Works 'shall have the care, management, administration, and supervision of water-works, gas-works, and other public utilities (except as otherwise provided in this act) owned or controlled by the City the supply and distribution of water and gas,' etc.; and
"WHEREAS: The said United Gas Improvement Company and/or its wholly owned subsidiary the Philadelphia Gas Works Company has no legal right to continue in possession of the Philadelphia Gas Works, city-owned property, after midnight, December 31, 1937; and
In this conclusion the Mayor's decision was also without foundation.
"WHEREAS: Any interference with the manufacture or the furnishing of gas to the consumers of Philadelphia would be a castastrophe, especially to four hundred thousand home-owners, to manufacturing and industrial plants and to mercantile establishments, and would prevent the gas lighting of the public highways, and
"WHEREAS: Failure to properly light the highways and homes would encourage lawlessness and might result in possible loss of life and injury to persons and damage to property;
"Now, Therefore, I, S. Davis Wilson, Mayor of the City of Philadelphia, recognizing that a condition has arisen requiring me as Mayor to declare a State of Emergency in the City of Philadelphia under the authority vested in the Mayor of the City of Philadelphia by the City Charter Act, Article II, section 6(d), 'The Mayor may, upon any emergency or apprehension of riot or mob, take command of the police force, and appoint as many special patrolmen as he may deem advisable. During their service the special appointees shall possess the powers and perform the duties of regular employees of the Department of Public Safety, and shall recive such compensation as shall be authorized by the Mayor, not exceeding that of the regular officers of the force performing corresponding duties,' as of twelve o'clock noon, December 31, 1937.
"Pursuant to such authority, I do hereby establish and issue the following orders and regulations to be effective during the period of emergency:
"1. I declare all property of the Philadelphia Gas Works, including credits, cash, cash income and all other assets, real or personal, to be the property of the City of Philadelphia, and to be under the supervision and control of the legally designated governmental agencies and officers who are hereby authorized to receive, maintain, operate and hold them for the benefit of the City of Philadelphia, subject to proper disposition.
"2. The present employees of the Philadelphia Gas Works Company, necessary for the proper protection, maintenance and operation of the said Gas Works are hereby designated as temporary employees of the City of Philadelphia and said employees are required to act for the City during the present emergency under the proper municipal supervision.
"3. All payments to the United Gas Improvement Company for management fees, reimbursements for losses resulting from the sale of appliances and payments for any other useless and extravagant purposes will be terminated as of twelve o'clock midnight today in accordance with the terms of the existing lease which terminates at midnight, December 31, 1937.
"4. All payments to the Koppers Coke Company at the present exorbitant contract rates are hereby discontinued and any gas furnished by the Koppers Coke Company during this emergency shall be subject to a rate to be fixed by law with the approval of the Public Utility Commission of Pennsylvania.
"5. During the emergency period there shall be a sequestration of all funds and property of the Philadelphia Gas Works Company subject to a proper audit.
"6. In view of the fact that no gas rate has been fixed effective January 1st, 1938, I further Proclaim that the retail rate for gas shall be fifty cents per one thousand cubic feet pending a rate to be fixed either by City Council or by the Public Utility Commission of Pennsylvania.
"7. Savings realized from the eight hundred thousand dollar management fee, the million dollars difference in gas cost between the Koppers Coke Company and manufacture of gas in the City-owned plant, and approximately six hundred thousand dollar loss from the sale of appliances and charged to the consumer, will permit compensation of all necessary employees of the Gas Works to be increased five per cent.
"8. I call upon all citizens of Philadelphia to cooperate with the Mayor and duly constituted municipal officers in the establishment, during the emergency, of gas manufacture in the municipally owned plant, assuring them that every protection will be provided for peaceful and efficient operation for the benefit of the gas consuming public."
In their answers to the petition and to the bill, defendants aver (and it will be observed that the averment is of present intention and therefore not responsive to plaintiff's definite averment of the Mayor's intention on December 31, which may therefore be regarded as unanswered): "It is denied that S. Davis Wilson, Mayor of the City of Philadelphia has any intention of taking possession by physical force of the Philadelphia Gas Works, but it is averred that he is asserting a technical possession of the said Philadelphia Gas Works so as to protect the rights of the City of Philadelphia in the said property and its rights to recover mesne profits in any action of ejectment that may be instituted for its possession, and so as not to permit or allow by acquiescence in the claims of the Complainant, the accrual of rights or privileges on the part of the said company, in detriment and prejudice to the rights, powers and interests of the said City.
A statement made by an assistant city solicitor during the hearing before President Judge FINLETTER may indicate why the answer is not more responsive to the averment: "Therefore when it came time to file our answer in this case I dictated it. I stated the facts as I knew them of my own knowledge and I believe, although I don't know, that the Mayor never had any intention vi et armis of seizing this plant."
An extract from the testimony may show what defendants meant by the phrase "asserting a technical possession." "Q. Now, Mr. Wood, you don't mean to say that as consultant of the City of Philadelphia, paid by the Mayor, that you never discussed with him the operation of the gas works when he took it over? A. The only time he ever had any discussion with me in that respect was on December 31, 1937, when he called me to his office and asked me if I would be prepared if it was necessary to take over the operation of the gas works as of midnight of that night and I said I could. A few hours later he told me it would not be necessary." We assume that the time "a few hours later" referred to a time after the restraining order was issued.
"Respondents are advised by counsel and therefore aver that they are entitled to institute an action of ejectment and other remedial process to establish the said rights of the City of Philadelphia to the possession and control of the said Philadelphia Gas Works and that under Article I, Section 6, of the Constitution of Pennsylvania, the said City, as owner with rights of possession of the said property, is entitled to a jury trial of all disputed facts with respect to its right to possession of the said premises and that any action taken by your Honorable Court, pursuant to the petition filed in the present case would deny to the City the equal protection of the law and deprive it of its property without due process, in violation of the Fourteenth Amendment to the Constitution of the United States and also of the aforesaid Article I, section 6, of the Constitution of Pennsylvania."
Now, not only was the Mayor's threatened conduct generally unlawful, but the record shows that, in endeavoring to take possession of the Gas Works, December 31, 1937, he was proceeding in direct opposition to the action of the legislative branch of the City Government. On December 30, 1937, the Mayor was informed in writing that on December 29, 1937, City Council had "passed over the veto of the Mayor by a vote of yeas, 16; nays, 6" an ordinance, therefore disapproved by him, directing him "to execute and deliver on the part of the City, a lease or contract with The Philadelphia Gas Works Company . . . for the lease to said Company of the Philadelphia Gas Works for a term beginning January 1, 1938" in a form contained in and made part of the ordinance, a certified copy of which accompanied the written notice to him.
We accept the findings of fact made by President Judge FINLETTER; we find them supported by evidence in the record; many of them result from the issues raised by defendants' reliance as a defence in this case on the averments made as a basis of the accounting sought in the equity suit in Common Pleas No. 4. We quote the following findings:
"(a) That S. Davis Wilson intended to take possession of the Works by force.
"(b) That reserves to meet future and contingent liabilities were properly set up and were not excessive.
"(c) That a balance of $288,179.70 was due by the City to the Company for betterments and additions to the plant, and was not paid.
"(d) That such payment not having been made the lease was not terminated and is still in force.
"(e) That the Company is not indebted to the City or to the Gas Rate Fund.
"(f) The City cannot now object to the Koppers contract because it expressly, and after long and careful examination, authorized it to be made.
"(g) The rate of interest in capital investment was fixed by the lease at seven per cent to the City on the value of the plant, and six per cent to the Company on its capital invested.
"(h) The pensions to employees on the basis of their experience and skill were properly paid.
"(i) That sound judgment required advertisements and propaganda to obtain New Business.
"(j) That sale of tar processed into Ugite resulted in high profits, and that there is no proof that more could have been made by other disposition of the tar. And that the Company owes nothing on this account.
"(k) That the charges for servicing street lamps were reasonable and approved by the Gas Commission and the City, and that the Company owes nothing to the City on that account."
In the circumstances disclosed by the record this is such an extreme case as to make it the duty of the court to take original jurisdiction; the cases cited above leave no doubt of the authority; the rule to show cause will accordingly be made absolute.
Coming now more particularly to the case presented by the bill and answer, it is to be noted, as has been said, that the bill is in substance a restatement of what is contained in the petition for the rule, and that the answer to the bill is, in substance, a restatement of the answer to the petition. What has been said of one is therefore applicable to the other. We can reach no other conclusion than that plaintiff is entitled to the equitable relief prayed for. The defendant Mayor's threats, culminating in his Proclamation repeating them under color of his office, and in direct contradiction of the ordinance of Council passed over his veto December 29, 1937, exhibited such disregard for law that it was necessary immediately, in granting the rule to show cause on December 31, 1937, also to restrain defendants from taking any of the threatened steps to interfere with plaintiff's peaceful possession and operation of the Gas Works pending the determination of the rule. Defendants not only proposed to trespass on property lawfully in plaintiff's use and possession, and by the ordinance passed by Council on December 29th intended to remain in its possession, but also to exclude plaintiff therefrom; they threatened a continuing trespass. The record sufficiently shows the character of plaintiff's operations and the necessity of supplying, without interruption, enormous gas consumption required by residents of Philadelphia, to indicate the probable magnitude of damage resulting to plaintiff and to residents of the city if the threatened trespass were not restrained. Equity will enjoin such conduct; Tri-Cities Water Co. v. Monessen, 313 Pa. 83, 85,
169 A. 159 (1933); Gray v. Phila. Reading Coal Iron Co., 286 Pa. 11, 16, 132 A. 820 (1926); Kramer v. Slattery, 260 Pa. 234, 238, 103 A. 610 (1918).
Returning now to the last quotation made from the defendants' answers to the petition and the bill, a word may be said in rejecting the suggested contentions that by taking jurisdiction and enjoining defendants, they are deprived of a jury trial and, in another aspect of the proceeding, are also deprived of due process; in this connection defendants refer to the fourteenth amendment to the federal constitution. Defendants' position seems to be, first, that the City had a remedy of which it was deprived, to sue for its real property in ejectment and have a jury trial; second, that the effect of our decision on the bill and answer will be to control Court of Common Pleas No. 4 in making its final decree in the City's equity suit in that Court. We have already referred to the agreement of the parties that both cases should be regarded as heard together by President Judge FINLETTER. That City's argument is that, as his findings of fact in the suit in No. 4 Court will probably be the same as those reported to this Court under the order of reference, if we now accept the findings reported to us, the judges of Common Pleas No. 4 will be constrained to follow the views of this court expressed in the decree now to be made; in other words, that the judges of the court below will accept President Judge FINLETTER'S findings because we have accepted them. That result may follow and properly, too; but it does not support the contention of want of due process. Due process is as much required by the state constitution as by the fourteenth amendment and, as we understand it, is, for circumstances such as are now presented, defined in the same terms. This court has ample power now, if such action were deemed advisable, to remove the equity suit into this court and dispose of it without waiting for its further consideration by the learned judges of Common Pleas No. 4. But we have not considered that step necessary because defendants themselves made their bill in that case part of their answer in this. We refer to the subject only to show that if our disposition of the proceeding of which we have taken original jurisdiction happens to dispose of a proceeding involving the same issues pending below, defendants are not deprived of due process; apart from our undoubted power to bring the record here by certiorari and dispose of it, defendants themselves elected to submit their claim here.
See section 13 of the Act of 1722, 1 Sm. L. 131, reprinted in note to 17 PS section 41, p. 16; the Act of June 16, 1836, P. L. 784, 17 PS section 41 and cases cited in notes to that section, among them, Com. v. Smith, 185 Pa. 553, 40 A. 73 (1898); Quay's Petition, 189 Pa. 517, 42 A. 199 (1899); Schmuck v. Hartman, 222 Pa. 190, 194, 70 A. 1091 (1908); Shafer v. Cascio, 288 Pa. 56, 61, 135 A. 639 (1927); Carbon County Judicial Vacancy, 292 Pa. 300, 302, 141 A. 249 (1928); Messmore's Estate, 293 Pa. 63, 141 A. 724 (1928); Rimer's Contested Election, Geary's Appeal, 316 Pa. 342, 345, 175 A. 544 (1934).
Wentz v. Philadelphia, 301 Pa. 261, 151 A. 883 (1930), was an original proceeding transferred to this court from the common pleas.
Nor is there any merit in the other objection that the city has been unconstitutionally deprived of a jury trial. Ample ground appears, as has been shown, for the intervention of equity. It was the acts of the Mayor that required equitable intervention; the solution of the dispute involved a complicated accounting, a subject particularly appropriate for a chancellor (indeed made cognizable in equity by statute) and seldom treated to the satisfaction of either party by a jury. "Equity is the special forum for obtaining an injunction, which may be granted to prevent actual or threatened trespasses or nuisances of a continuing and permanent character . . . and, when once the jurisdiction has thus attached, equity will itself proceed to round out the whole circle of controversy, by deciding every other contention connected with the subject-matter of the suit, including the amount of damages to which plaintiff is entitled because of injuries theretofore sustained." Gray v. Phila. Reading Coal Iron Co., 286 Pa. 11, 16, 132 A. 820. "By the Act of February 14, 1857, P. L. 39, enlarging section 39 of the Act of June 13, 1840, P. L. 666, 671 . . . the courts of common pleas are expressly given equitable jurisdiction in matters of account. This is not affected by Article I, section 6 of the state Constitution, which provides that 'trial by jury shall be as heretofore and the right thereof remain inviolate.' If the jurisdiction of courts of equity in matters of accounting was held to have been taken away by that provision, and such actions were required to be brought in courts of law, then 'trial by jury' would be extended beyond the realm of the 'heretofore,' and this the Constitution does not require." Schwab v. Miller, 302 Pa. 507, 510, 153 A. 731.
"It is a serious mistake to suppose that municipal officers are above the law, and can enforce civil rights, or perform even police duties, in their own way, in disregard of the forms of law. The officers of a municipality, from the mayor down to a police officer, are as much bound by the law as a private citizen, and have no license to transgress the law in the enforcement of the law": Easton Passenger Ry. Co. v. Easton, 133 Pa. 505, 521, 19 A. 486.
In its equity suit, the city expressly asked for an accounting; p. 42 of the answer to petition.
In Tide Water Pipe Co. v. Bell, 280 Pa. 104, it was said: "Being of opinion that plaintiff's title to the right-of-way has not been lost, we may, in order to round out the whole circle of controversy between the parties ( McGowin v. Remington, 12 Pa. 56, 63; Hurst v. Brennen (No. 1), 239 Pa. 216), so decree in this case; even though, but for defendant's wrongdoing, the question of title would have been cognizable only in a court of law ( Wilhelm's App., 79 Pa. 120; Pennsylvania Co. v. Ohio River Junction R. R. Co., 204 Pa. 356, 367); . . ."
The court is greatly indebted to President Judge FINLETTER for his valuable assistance in complying with the order of reference.
DECREE.
Now, June 30, 1938, after hearing the parties by their counsel and after considering the record, it is ordered, adjudged and decreed, for the reasons stated in the opinion of the court this day filed in the cause, that the defendants, City of Philadelphia, S. Davis Wilson, Mayor of the City of Philadelphia, Martin J. McLaughlin, Director of Public Works of the City of Philadelphia, Andrew J. Emanuel, Director of Public Safety of the City of Philadelphia, and Edward Hubbs, Superintendent of Police of the City of Philadelphia, and their subordinate officers, patrolmen, servants and agents and each of them and their successors in office, and all those acting or claiming to act under their authority, be and they are severally restrained and enjoined from taking any steps whatsoever to interfere with the peaceful possession by The Philadelphia Gas Works Company of the Philadelphia Gas Works and every part thereof until the lease dated February 8, 1926, described in the record as the lease under which that possession is held, is properly and legally terminated.
The defendants shall pay the costs.
The Chief Justice and Mr. Justice SCHAFFER did not hear the argument and did not participate in the decision.