author: Mr. Justice Mestrezat,

text:
    Harrison’s Estate.

      Executors and administrators — Trusts and trustees — Compensation— Commissions — Services rendered.

    The rule as to commissions to trustees in all cases is compensation for the responsibility incurred and for service and labor performed. In arriving at the compensation to which a trustee in any capacity is entitled, it is necessary to consider the amount of the estate, the labor performed and the responsibility imposed. These are the elements which determine not only the amount of the compensation, but the right to compensation at all. The mere fact that a person is a trustee will not support a demand on his part for compensation.
    There is no rate of percentage fixed by-law as compensation for a trustee. In many cases a gross sum is awarded, and this is in some respects preferable, as it leads to an inquiry disclosing the extent of the services rendered by the trustee which greatly assists the court in fixing the true compensation due him.
    Where executors with a power to sell real estate with reservation of ground rent, sell real estate for part cash and part reservation of ground rent, and it appears that they have effected the sale through a real estate agent who has been paid out of the estate for his services, and it also appears that the executors have received commissions on the rentals for a considerable period, they will not be awarded commissions on the capitalized principal of the ground rents reserved.
    In such a case as to the consideration for the real estate represented by the ground rent reserved, there was no conversion of personal property, and the executors would have to deal with it and account for it in the future as real estate and not as personalty. In this view, therefore, they would have no right to commissions upon it.
    Mr. Justice Fell dissents.
    Argued Jan. 21, 1907.
    Appeal, No. 95, Jan. T., 1906, by Clara E. Durant, from decree of O. C. Phila. Co., dismissing exceptions to adjudication in Estate of Joseph Harrison, Jr., deceased.
    Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Reversed.
    Exception to adjudication.
    From the record it appeared that the accountants, who were the executors under the will of Joseph Harrison, Jr., deceased, sold certain real estate in the city of Philadelphia for $1,000,000, $100,000 in cash and the reservation of a ground rent capitalized at $900,000. The accountants claimed as commissions three per cent on $1,000,000. The auditing judge, Ashman, J., allowed the commissions. The court in banc in an opinion by Hanna, P. J., Dallett, J., dissenting, overruled exceptions to the adjudication.
    March 11, 1907:

      Errors assigned were in overruling exceptions to adjudication.

      M. Hampton Todd, for appellant.
    An executor and trustee, having let ground of the estate on ground rent, is not chargeable with the principal of the ground rents, nor entitled to commission on that amount: Appele’s Estate, 2 Phila., 239; Bell’s Estate, 1 Parsons Select Eq. Cases, 200.
    Compensation is proportioned to the responsibility incurred and to the labor and care bestowed: McElhenny’s App., 46 Pa. 347; Stevenson’s Estate, 4 Wharton, 98; Sunderland’s Est., 203 Pa. 155; Whelen’s App., 70 Pa. 410; Lowrie’s App., 1 Grant’s Cases, 373; Duval’s App., 38 Pa. 112.

      Silas W. Pettit, with him Townsend, Elliott (& Townsend, for appellees.
    It is an unquestioned rule of law that those acting as executors, trustees or in any other fiduciary capacity, are entitled to be compensated at rates which the court shall determine to be proper, and that they are entitled to such compensation at the time at which the services are rendered, for which the same is allowed: Callaghan v. Hall, 1 Sergeant & Rawle, 241; Frishmuth’s Estate, 34 W. N. C. 427.
   Opinion by

Mr. Justice Mestrezat,

In Harland’s Accounts, 5 Rawle, 323, Chief Justice Gibson delivering the opinion of the court says (p. 330): “ Though usually awarded in the form of commission, the rate (of compensation of trustees) is not determinable by any established practice or rule, being graduated to the responsibility incurred, the amount of the estate, and the sum of the labor expended. It may be awarded even in a gross sum, according to a common practice in the country, which I take to be the preferable one, as it necessarily leads to an examination of the nature, items, and actual extent of the services, which the adoption of a rate per cent has a tendency to leave out of view. To adopt the same rate in all cases would often produce a monstrous overcharge.” And in McCauseland’s Appeal, 38 Pa. 466, Strong, J., speaking for the court said (p. 470): Commissions are given as a compensation for labor and responsibility, and where neither the one has been performed, nor the other incurred, there is nothing to be compensated.” In Montgomery’s Appeal, 86 Pa. 230, Mr. Justice Gordon, in delivering the opinion, says (p. 234): The compensation of a trustee, of any character, may be arrived at, as a matter of convenience, by the way of a percentage on the amount of receipts and disbursements. But after all, on all authority, it is a question, not of percentage but of compensation. "When the court has fairly responded to the interrogatory, how much has the trustee earned ? It has discharged its whole duty in the premises. It, therefore, comes to nothing to say, the percentage is large or the percentage is small as compared with the estate, if the executor has received neither less nor more than what his services are worth.” After quoting from the cases above cited, the opinion continues : “ This same general idea runs through all the cases and it is useless to enumerate them. Whilst a percentage is constantly spoken of and used because of its convenience, yet, it is compensation, nothing more or less, that is steadily kept in view.”

It will be observed, therefore, that the rule as to commissions in all cases is compensation for the responsibility incurred and the service and labor performed. In arriving at the compensation to which a trustee in any capacity is entitled, it is necessary to consider the amount of the estate, the labor performed and the responsibility imposed. These ars the elements which enter into and determine not only the amount of the compensation, but the right to compensation at all. It also necessarily follows that if there has been no service performed or liability incurred by a trustee he is not entitled to and should not receive any compensation wdiatever. The mere fact that he is a trustee will not support a demand on his part for compensation. The onus is upon him, before he can demand compensation for services, to show to the satisfaction of the court a responsibility incurred and services performed in the execution of his trust.

There is no rate of percentage fixed by law as compensation for a trustee. Frequently compensation is determined by allowing a percentage of the fund under the control or in the possession of the trustee, but this rule is not universally adopted in ascertaining a trustee’s commission. As suggested by Chief Justice Gibson, in many cases a gross sum is awarded, and that, as he says, is in some respects preferable, as it leads to an inquiry disclosing the extent of the services rendered by the trustee which greatly assists the court in fixing the true compensation due him. A very small percentage which might seem reasonable compensation might result in a very large' sum in gross which would suggest a compensation entirely beyond what was adequate and fair to the trustee; while on the other hand a large percentage which apparently would be excessive compensation might result in a small sum in gross which would at once disclose inadequacy and unfairness of compensation for the trustee. The safer rule, therefore, to be adopted and followed in remunerating a trustee for his services is the simple one that he be compensated for the services performed and the liability incurred. It should be understood by trust companies as well as individuals that the position of a trustee is not to be sought nor granted for the purpose of profit. Fair compensation, to be ascertained under the rule suggested, is all that a trustee has a right to demand, and all that any court should award.

Turning now to the case in hand, we are of opinion that the learned court below was in error in awarding commissions upon the ground rent capitalized at $900,000. The question involved here arises on the audit of the thirty-second account of the executors of the estate of Joseph Harrison, Jr., deceased. The will of the deceased provided, inter alia, as follows : “ I give and devise all my real estate .... unto my executors .... in trust, that the same shall be by them sold, disposed of, and converted into money or personalty, and to that end I give to and confer upon them .... the fullest and amplest power, authority, and direction to sell, convey, and dispose of all my said real estate, and all real estate which they may acquire, .... and with or without the reservation of any ground rents payable to them in trust for the uses of my will; which ground rents, when so reserved, I authorize them to make redeemable upon such terms and stipulations as they may think expedient, and release, assign, or extinguish in fee, at their discretion.” By deed dated and acknowledged on December 14, 1904, the executors sold and convoyed to David C. Folwell for the consideration of $100,000 certain real estate at the northwest corner of Market and Thirteenth streets. In the deed the grantors reserved a ground rent of $36,000 per annum for ten years and thereafter at $54,000 per annum, and extinguishable after ten years by the payment of $900,000. In their account out of which this controversy arises, the executors debit themselves with $1,000,000 as the proceeds of the sale of this property, and take credit for having invested $900,000 in the ground rent. They claimed credit for $10,000 paid a broker for negotiating the sale, and three per cent on $1,000,000, or $30,000, as commissions for themselves. The auditing judge allowed the commissions. To this adjudication, Mrs. Durant, a legatee, filed exceptions which were overruled and dismissed by a majority of the court in banc, and a final decree was entered. From this decree Mrs. Durant has appealed, and the several assignments of error raise the single question whether the court erred in allowing the accountants a commission on the $900,000, ground rent reserved in the deed conveying the Market street property to Folwell.

Under the provisions of the will, the executors had ample power to sell and convert this real estate into money. If they had done so and had claimed a commission on the proceeds of sale, there would have been no objection to compensation for their services. It will be observed, however, that while the testator authorized the executors to sell his realty and convert it into money, he at the same time empowered them to sell and convey with the reservation of ground rents which thereafter they were authorized in their discretion to assign or extinguish in fee. They did not sell this entire property and convert it into money but, exercising the power conferred by the will, they sold and conveyed it for a certain sum and reserved a ground rent capitalized at another sum, the. two sums aggregating the full value of the whole property. In. other words, following the directions of the will, they converted part of this real estate into money and part of it they retained as real estate. This is the effect of the sale and mnst be so conceded by all parties. It was not a sale of the entire premises at Thirteenth and Market streets, with payment of part of the purchase money and the balance secured by mortgage or otherwise. It is, what the conveyance itself shows it to be, a grant of the premises, with a reservation of a ground' rent which, under all our decisions, is held to be real estate.

Under these circumstances, what right have these executors to demand commissions upon the capitalization of the ground rent ? It is real estate and, as conceded by the court below, is not the subject of an executor’s account. The executors, therefore, have not converted it into money, but it still remains as the testator left it, real estate. The trustees must deal with it and account for it as real estate and not as personalty. In this view, therefore, they have no right to commissions upon it.

The court below, in support of its position awarding commissions, held that the will worked a conversion. But that of itself would not justify the executors in claiming commissions until an actual conversion had been effected by the trustees. While the will authorized a conversion, it, at the same time, authorized the executors at their discretion to permit the realty to remain such, by empowering the executors to reserve a ground rent. What the executors did in this instance in reserving a ground rent was within the express powers conferred by the will itself. Hence the general powers conferred upon the executors to convert was modified to the extent of permitting the executors to retain the whole or part of the real estate as such. To the extent of the ground rent reserved in this instance, the estate of the testator retains its original character. Therefore, all that these executors could demand would be adequate compensation which could be arrived at by allowing a commission upon the income.. The decree of the court below shows that they have been adequately compensated by the commission allowed upon the rents which they have received and which they will receive from this property.

We have distinctly ruled that an executor or trustee is not entitled to commissions on the capitalized amount of a ground rent which is an incumbrance on the property and which is included in the price of the real estate sold out of which it is payable: Moore’s Estate, 211 Pa. 343; Brolasky’s Appeal, 3 Penny. 329. According to the weight of authority, if real estate subject to an incumbrance is sold by an executor or administrator, he is entitled to commissions only on the balance of the price remaining after deducting the amount of the incumbrance : 11 Am. Ency. of Law, 2d Ed. 1299. There is a distinction between the cases cited and the case at bar, but it is a distinction without a difference. In Moore’s estate the ground rent was in existence when the property was sold and the purchaser took it subject thereto and subsequently paid the amount to the owner of the rent. Here the property is sold and that part of it, capitalized at $900,000, remains in it as real estate. All that the trustees receive is the sum of $100,000 out of the $1,000,000 at which the property was valued. The ground rent remains and the purchaser takes the property subject to its payment. It is immaterial that the owners of the ground rent are the executors or grantors. It is real property and the title is in the executors for the benefit of the estate.

There is ample reason for holding that these executors are not entitled to commissions on the ground rents. As we have seen, ground rents in Pennsylvania are regarded as real estate. The owner of the rent, like the owner of the land, has a fee simple estate; the former, in the rents, the latter, in the land out of which the rent issues. The capitalization of the ground rents, $900,000, is the value of the rents as real estate. During the ten years, the executors will receive $36,000 annually as rentals of this real estate on which they will receive an annual commission of $1,030. If, during the ten years or at any other time while they are the owners of the rent they convey it to the trustees, as provided in the will, they will have no right to commissions. Their right to commissions on the principal of the rent would arise only on the happening of the contingency that the rents were sold and thereby converted into money. Until that time arrives, the property is real estate and they are not entitled to commissions.

There is no proof in this case that the accountants performed any service or assumed any responsibility which entitles them to a commission on the capitalized ground rent. In making this sale, they apparently did nothing except to receive offers made by a broker, employed by the purchaser, and to decline the offers until they reached the accepted price. This broker, as shown by the testimony, was employed by and acting for the purchaser throughout the transaction; yet one of the terms he imposed in making the purchase was that he should receive $10,000 from the accountants for his services. This was paid him, and the accountants are now asking that $21,000 additional shall be paid them simply and substantially for reserving a ground rent in a deed conveying the property to the purchaser. The learned judge of the court below says that “ there is no proof of unusual or extraordinary labor and services'performed by the executors in securing a purchaser, and no more than ordinary responsibility assumed by them.” He should have said that there were no services performed or responsibility assumed which would entitle the executors to any commissions beyond the $3,000 which they were receiving as compensation for the sale. As we have said, the negotiations for the sale were made on the part of the purchaser by the broker, and the only action, of any moment, on the part of the executors was to refuse all offers prior to the one accepted. If this property had been unproductive, had required and received attention from the accountants and thereby imposed upon them care and labor, for which they had received no compensation, the claim for compensation here would be presented in a different light and for very different reasons. If, also, the trust had terminated and the trustees had received no compensation for the care and attention bestowed upon the real estate in- question, there would be grounds for claiming commissions. Rut none of these facts exist here. On the contrary, this property is in the heart of the city of Philadelphia, and for many years has been yielding large rentals on which the executors have been receiving a large commission. In addition to this compensation for the care and attention bestowed upon the property, the court below has awarded the. executors a future compensation of three per cent on the ground rent, or $1,030 annually for their services in receiving and distributing these rents. In view of all these facts, we think the executors have been fully compensated for the responsibility they assumed and for the services they performed, and that to permit them to take an additional sum of $27,000 from the estate of the decedent as commissions would be simply granting them a gratuity for which neither responsibility has been incurred nor services have been performed.

The fifth assignment of error is sustained, the accountants are surcharged with the sum of $27,000, for which credit was taken in their account as commissions on the principal of the ground rent, and the decree as thus modified is affirmed.

Fell, J., dissents.


source: Caselaw Access Project

license: Public Domain

text:
    Wolff Chemical Company, Appellant, v. Philadelphia.

      Corporations — Trading corporation — Right to maintain taxpayer’s bill — Municipalities—Diversion of public funds.

    A trading corporation which is a resident and taxpayer in a city has a right to maintain a taxpayer’s bill to restrain illegal action on the part of the officials of the city in the appropriation of public funds; and it is immaterial that the fund in question was raised by a loan authorized by the electors of the city and not by taxpayers.

      Municipalities — Increase of indebtedness — Wrongful appropriation of funds.

    Where a city has incurred liability in opening a boulevard and thereafter the electors of the city have authorized a loan, part of which is to be “for continuing the improvement of the boulevard,” the city councils have no right to divert the fund raised by the loan for the payment of mandamuses for the opening of the boulevard.
    In such a case it is dear that the appropriation “for continuing the improvement of the boulevard,” was not intended to be applied to the opening of the boulevard. “Continuing the improvement of the boulevard” implies the prior existence of a boulevard, a change for the better in its condition, and that some progress had previously been made in bettering its condition when the city councils and the electors authorized the increase of the municipal indebtedness for the purpose.
    Argued Jan. 21, 1907.
    Appeal, No. 91, Jan. T., 1906, by plaintiff, from decree of C. P. No. 1, Phila. Co., Deo. T., 1901, No. 1627, dismissing bill in equity in case of The Wolff Chemical Company v. City of Philadelphia, John Weaver, Mayor of Philadelphia, John AL Walton, City Controller, et al.
    March 11, 1907:
    Before AIitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Reversed.
    Bill in equity for an injunction. Before Willson, P. J.
    The facts are stated in the opinion of the Supreme Court.

      Error assigned was decree dismissing the bill.

      John G. Johnson, with him Henry P. Brown, for appellant.
    The plaintiff had a standing to maintain the action: Pittsburg’s App., 79 Pa. 317; Page v. Allen, 58 Pa. 338; Sank v. Philadelphia, 8 Phila. 117; Barr v. Philadelphia, 191. Pa. 438.
    The indebtedness of the city was permitted to be increased for the special purpose of “ continuing the improvement of the Boulevard.”
    The opening of the boulevard was not within the purpose for which the indebtedness was authorized to be increased.
    Councils had no right to transfer the appropriation of money specifically raised for “ continuing the improvement of the Boulevard,” to the payment of damages to property owners whose lands had been taken by the opening thereof: Major v. Aldan Boro., 209 Pa. 247.

      Ernest Lowengrund, with him James Alcorn, assistant city solicitor, and John L. Kvnsey, city solicitor, for appellees.
    Appellant was without standing: Heffner v. Com., 28 Pa. 108; American Product Co. v. Philadelphia, 15 Pa. Dist. Rep. 587; Smith v. McCarthy, 56 Pa. 359; Sharpless v. Mayor, etc., of Phila., 21 Pa. 147; Page v. Allen, 58 Pa. 338; Wheeler v. Philadelphia, 77 Pa. 338; Mazet v. Pittsburg, 137 Pa. 548; Blankenburg v. Black, 200 Pa. 629.
    The use of the fund to pay land damages for the opening of the boulevard is not in violation of the terms upon which' it was authorized to be borrowed; Barr v. Philadelphia, 191 Pa. 438; Major v. Aldan Borough, 209 Pa. 247.
   Opinion by

Mr. Justice Mestrezat,

By certain ordinances, enacted March 28, 1903, the councils of the city of Philadelphia directed notice to be given the property owners thereby affected that the boulevard from Broad to Second street would, in three months, be required for public use to its full width as then on the city plan; also directed that the proper department advertise for proposals for improving the boulevard ; and appropriated $250,000 to commence the improvement. In pursuance of an ordinance of December 17, 1903, the electors of the city, at an election held in February, 1904, authorized an increase in the indebtedness of the city of $16,000,000, of which $1,000,000 were to be “ for continuing the improvement of the boulevard from Broad street northeastward.” By an ordinance of December, 1904, it was ordained that the city controller transfer $500,000, set aside for continuing the improvement of the boulevard, to item eighteen in the appropriation to the department of city treasurer for the purpose of paying mandamuses for opening the boulevard. This bill was then brought by the Wolff Chemical Company, a corporation duly organized under the laws of Pennsylvania and a taxpayer of the city of Philadelphia, against said city and certain of its officers to restrain the transfer of the money as provided in the last-named ordinance. It avers that the ordinance is illegal, and that the payment by the city treasurer of mandamuses for the opening of the boulevard out of any portion of the $1,000,000 appropriated for continuing the improvement of the boulevard cannot legally be made. The defendants filled a demurrer to the bill and assigned, inter alia, as grounds therefor that the plaintiff had no right to maintain the bill, and that the use proposed to be made of the $500,000 was for the same purpose for which it was authorized by the ordinances of councils and the vote of the electors. The learned court below sustained the demurrer, holding that the “improvement” of the boulevard included the “opening” of the boulevard. The plaintiff has appealed.

The two questions thus raised by the pleadings are: (1) whether the plaintiff has the light to maintain the bill, and (2) whether councils have the right to transfer $500,000 of the $1,000,000 fund authorized to be applied in continuing the improvement of the boulevard, and use it for the purpose of paying damages to property owners whose lands have been taken by the opening of the boulevard.

The plaintiff is a trading corporation, incorporated under the laws of this commonwealth, and is doing business in the city of Philadelphia. It is a taxpayer of the city, and it claims that, as such, it has, like an individual taxpayer, the right to maintain a bill to test the validity of an intended illegal diversion of an appropriation of the funds of the city by authority of councils. The defendants contend that a trading corporation, although a resident and taxpayer, has no standing to file a taxpayer’s bill against a city or its officers. But with that contention we do not agree. A corporation may avail itself of any legal and equitable remedy which would be available to an individual under similar circumstances; and it is impliedly authorized to sue in chancery whenever its equitable rights are involved: 1 Morawitz on Corporations, sec. 357. The defendants’ contention overlooks the ground upon which a party is authorized to invoke the aid of a court of equity to prevent the misapplication of public funds. In such ease, he is accorded a standing in equity because of the reason that he is a taxpayer and that if municipal funds are misappropriated he will be injured pecuniarily, and not upon the ground that he is simply a citizen or an inhabitant or an elector. The invasion of his pecuniary interests is the special injury that gives him a standing to maintain a bill. This is the reason recognized and stated as the ground for permitting any party to object to an illegal diversion or misappropriation of public funds: 2 High on Injunctions, sec. 1298; 2 Cooley on Taxation, 1427; Page v. Allen, 58 Pa. 338; Pittsburg’s Appeal, 79 Pa. 317; Frame v. Felix, 167 Pa. 47. In the Pennsylvania cases, the ground for sustaining the bill is said to be “ that the interest of a taxpayer, when money is to be raised by taxation, or expended from the treasury, is sufficient to entitle him to maintain a bill to test the validity of the law which proposes the assessment or expenditure.” In sustaining a bill filed by taxpayers to restrain action of the city authorities under an ordinance creating a loan for the extension of water works, in Sank v. Philadelphia, 8 Phila. 117, Chief Justice Thompson said (p. 122): “ I have no doubt of their right. We have held this more than once. It seems to me it is most appropriately their province. Some, as well as all, can do it. It would be impossible to make all the taxpayers parties to the bill, and hence some must act, or none will. The taxpayers hear all the burdens of expenditures by the city. They ought, in order to protect themselves from unreasonable burdens, scrutinize the acts of their servants when proposing to increase their burdens.”

.Regarding his pecuniary interest as the ground upon which a party is permitted to file a taxpayer’s bill, it logically follows that a citizen, inhabitant or incorporator of the municipality can have no greater right or higher ground than a resident taxpaying corporation to maintain such bill. An illegal diversion or a misapplication of public funds, raised by general taxation, increases the burdens of a corporation as it does those of a citizen, and therefore it is not apparent why the courts should be closed to the corporation and open to the individual. The effect of the misconduct of the city officials in misapplying the public funds is the same on both, and the remedy and the protection of the law should be afforded alike to both parties. A corporation is simply an aggregation of individuals, and there can be no good reason why their interests in the taxable property of the corporation should not receive the same protection in a court of equity against official misconduct as if the injury had been done against taxable property held by them as individuals. To hold otherwise would be to deprive a corporation of the equal protection of the laws of the commonwealth, which is guaranteed by the fourteenth amendment to the federal constitution: Santa Clara County v. Southern Pac. R. Co., 118 U. S. 391; Pembina Consolidated Silver Mining and Milling Co. v. Pennsylvania, 125 U. S. 181.

In addition to the reason suggested, there is another one, having at least some force, why a trading corporation should be allowed to maintain a taxpayer’s bill. After a diligent search, we have been unable to find in any American or English decision of a court of last resort where the question has heretofore been raised. In none of the reported decisions of the several states of this country, nor in any decision of any of the federad courts where a corporation has invoked the protection of a chancellor in such cases, has the defendant challenged the right of the corporation as such to maintain the bill. On the other hand, there are numerous cases in the various jurisdictions in which, a corporation has successfully maintained a taxpayer’s bill to restrain illegal action in the appropriation of public funds. If the question was an open one, or there was any doubt of a corporation’s right to protect its property or its funds against the inroads of the misconduct of municipal officials, it is most singular that in the numerous cases which have reached the appellate courts of this country and of England it has not been raised or adjudicated. We can attribute it only to the fact that the profession has universally acquiesced in the right.

It is argued by the learned counsel for the appellees that permission to increase the indebtedness was granted by the electors of the city and not by the taxpayers, and for that reason a corporation, not being an elector, has no right to invoke the aid of the court to prevent the illegal diversion of the fund. The counsel say in their brief: “ The present appellant being a corporation, is, of course, not an elector, and it may well be asked by what right it might seek to intervene in order that the permissive power granted by the body of the people should be duly carried out, even were a violation thereof attempted.” The conclusive answer to that proposition is, that while the electors gave the permission to the city to increase its indebtedness and thereby to impose a tax, the law gives to the individual or corporation who must pay the tax the right to demand that the city officials shall appropriate the fund to the purpose intended, and that it shall not be misappropriated and the burden of the taxpayer thereby increased. In other words, while the authority to borrow money must come from the electors of the city, the taxpayers who are required to repay it have such an interest in the appropriation of the fund as will enable them to invoke the aid of a chancellor to prevent its diversion to an illegal or unauthorized purpose. The misapplication of the fund is not, as argued by the city solicitor, a matter which lies between the city and its citizens, and as to which the plaintiff corporation is a stranger. No individual can be regarded as a stranger to any action of a municipality or its officers which tends to impose upon him additional taxation. He is a party in interest and hence has a right to be heard before he is deprived of his property. This rule applies to the corporation and to the individual alike. It is a fundamental principle, and protects the artificial, as well as the natural, person in its property rights.

It is also argued by the appellees that the appellant “ is without a monetary interest or concern in the controversy,” because, as alleged, if the damages for the opening of the boulevard be not paid out of this loan, they must bo paid by the city either by taxation or by some loan to be raised hereafter. If this position is tenable, it will bo difficult to find an instance where a taxpayer can enjoin a misappropriation of public funds. The learned counsel, however, are in error in their contention that the appellant has no monetary interest in having the city apply this fund to the purpose for which it was appropriated. The $500,000 sought to be diverted hero was appropriated for the specific purpose of continuing the improvement of the boulevard. If the fund is not applied to that purpose, a like sum must be raised by imposing a tax upon the taxpayers of the city to carry out the improvement of the boulevard. To the extent of its taxes, this corporation is therefore pecuniarily interested. It is not to the point that the fund misappropriated will go to the payment of another indebtedness of the city, and hence relieve the taxpayers to that extent. It is sufficient for the taxpayer to know that the diversion of this fund from the purpose for which it was intended and specifically appropriated will impose upon him an additional burden in order to carry out the improvements on the boulevard authorized and directed to be done by the authority of the city. He is concerned, monetarily, in having the $500,000 applied to the specific purpose for which it was appropriated, and should the court refuse to compel the city to so apply it, he will be injured to the extent of the additional taxes he is required to pay.

We have no doubt of the right of the plaintiff corporation, being a resident and taxpayer of the city of Philadelphia, to maintain this bill.

The second question raised by the record and the only one considered and ruled by the court below is the right of the city councils to transfer the fund appropriated for “ continuing the improvement of the boulevard from Broad Street northeastward,” and apply it “ for the purpose of paying mandamuses for the opening of the boulevard.” The learned trial judge ruled the question in favor of the city, and held that it was not a diversion of the fund from the purposes for which it was appropriated. "We think this is error.

The action of the city councils in dealing with the boulevard, as disclosed by the various- ordinances, recognizes a distinction between the opening of the boulevard and the improvement of it. By the ordinance of March 28, 1903, the director of the department of public works was directed to notify the owners of the property through which the boulevard would pass that at the expiration of three months, “ the street will be required for public use to its full width as now on the city plan.” This was followed by an ordinance of the same date which authorized the same city department to advertise for proposals for grading, curbing, macadamizing, planting trees, and “other contingent work required to improve the boulevard ; ” and in pursuance of the ordinance, the city arranged for the “improvement of the boulevard” by grading, curbing, culverting, macadamizing, bridging and otherwise. Another ordinance of the same date appropriated $250,000 “ for the commencement of said improvement,” and in pursuance of this ordinance, a contract was let in April, 1903, for grading, paving, etc., “ and doing such contingent work required to improve the boulevard ” as might be ordered by the bureau of highways. It will, therefore, be observed that prior to the election for determining the question of the increase of the indebtedness the boulevard was on the city plan, was directed to be opened to the full width, and the city had contracted for its improvement by grading, curbing, macadamizing, etc.,- to the extent of the partial appropriation made for the purpose. Subsequent to the action thus taken in regard to the boulevard, the councils in May, 1904, authorized the creation of a loan, a part of which was to be used for “ continuing the improvement of the boulevard,” and in pursuance of the authority granted in that ordinance the electors of the city voted in favor of the increase of the indebtedness for that purpose. The loan secured in pursuance of this election was likewise partly appropriated “for continuing the improvement of the boulevard.” It, therefore, appears that in all the proceedings of the city council, dealing with the boulevard, a distinction was -recognized by the city itself between the opening and the improvement of the boulevard. As thus defined by the city, the opening of the boulevard was the vacation of the ground included within its limits by the property owners and the removal of the buildings therefrom ; and its improvement consisted in grading, curbing, macadamizing, the planting of trees and work of that character upon the ground after the street had been opened.

But aside from the action of the councils indicating this to be their interpretation of the language of the appropriation, we think it clear that the appropriation “ for continuing the improvement of the boulevard” was not intended to be applied to the opening of the boulevard. “Continuing the improvement of the boulevard ” implies the prior existence of a boulevard, a change for the better in its condition, and that some progress had previously been made in bettering its condition when the city councils and the electors authorized the increase of the municipal indebtedness for the purpose. As tersely put by Grey, V. C., in Ames v. Trenton Brewing Co., 56 N. J. Eq. 309, “in order that there might be an improvement there must previously have been something to improve.” As long as the buildings occupied the site of the proposed boulevard and the damages due the property owners were unpaid or unsecured, there was no street to be improved. A farm may be improved by the renewal of necessary fencing, a manufactory may be improved by the installation of modern machinery, a patented article may be improved by the addition of some useful and necessary device, and a city may be improved by the opening and construction of new streets, by proper waterworks and sewer systems, but in each instance there is in existence a thing to be improved. Applying this principle here, there could be no improvement of the boulevard, until it became a boulevard by being opened in pursuance of the city ordinance. Then, and not till then, was it a street nor could it have been improved as such. If councils legally could and did make an appropriation for the improvement of the city without specifying the manner in which it was to be done, it may be conceded that the money could be applied in opening as well as constructing a street necessary to the needs of the city. Thus used, the word “improvement” is applied to the betterment of the whole city and the appropriation could be applied for any purpose which would accomplish the object. On the other hand, if the appropriation was made for the improvement of the waterworks system, it would hardly be contended that the money could be used to open or grade a street or to improve the sewer system, although it certainly would improve the city. The word “improvement” is a relative term, and its meaning must be ascertained from the context and the subject-matter of the instrument or writing in which it is used. It follows that the word as used in the phrase “ for continuing the improvement of the boulevard,” does not mean or apply to the opening of the street, but to bettering its condition after it had been opened as laid on the city plan. In other words, the “improvement of the boulevard,” consisted in grading, curbing, macadamizing, etc., the street after it had been opened “ to its full width as now on the city plan.”

In obedience to the requirements of the Act of June 9, 1891, P. L. 252, 2 Purd. 1391, the official proclamation of the election in February, 1904, contained a statement of “ the purposes for which the indebtedness is to be increased.” One of the purposes was: “for continuing the improvement of the boulevard from Broad street northeastward $1,000,000; ” and on the ticket cast by each voter was stated the same purpose and the amount of the contemplated increase in the indebtedness. It must be assumed that the electors before casting their votes were familiar with the proceedings of the councils dealing with the proposed boulevard. The press of the city gave them full information. They, therefore, must be regarded as knowing that the boulevard had been declared a city street and that an appropriation had been made for its partial improvement. Under these circumstances, it cannot reasonably be doubted that each elector, when casting his vote, believed that the street had been opened, and that the increase of the indebtedness was for the purpose stated in the ballot furnished him, viz.: “ for continuing the improvement.” In view of the admitted facts, it is idle to contend that the electorate at that election believed they were voting for or against an increase for the purpose of opening the boulevard. Whatever may have been the actual condition of the street as to having been opened or not at the date of the election, necessarily, a very small number of the voters would have personal knowledge of the fact, while the action of the city councils, as given to the public and on which they had the right to rely, gave the assurance that the street was open and in progress of improvement. The votes in favor of the increase of the indebtedness were cast in the belief that such was the condition of the boulevard, and that the increase was for the purpose of continuing the improvement,” and not for the opening of the street. If the ticket had contained a notice that the increase was for the purpose of opening a boulevard,” it is problematic whether a majority of the electors would have supported the increase, in view of the fact that they would have known that a large additional increase would be required to improve the street after it had been opened. It is one thing to present to a voter a proposition to increase an indebtedness for the purpose of continuing or completing a municipal improvement already in progress, and quite another thing to ask him to increase the debt of the city for the purpose of inaugurating a public improvement which will result m the expenditure of large sums of money. For obvious reasons, he might and probably would favor the first proposition, but he might have great hesitancy in supporting the latter. The purpose of the law in requiring full notice to the elector of the object of increasing the indebtedness is to enable him to vote intelligently and with a full comprehension of the purpose to which the money is to be applied. In casting his vote for or against the proposition, he is controlled by the purpose of the proposed increase as stated in the ballot furnished him by the city itself. Good faith and official integrity, therefore, require the city authorities to apply the fund thus placed in their hands strictly in accordance with the purpose for which it was voted. The language of the notice given the voter is that of the city councils, and if there is any doubt in its meaning it must be resolved so as to prevent the application of the fund to a purpose other than that for which the circumstances and the apparent intent of the electors intended it.

The learned counsel for the defendants suggest that if the city is not permitted to use the appropriation for the opening of the boulevard, that it may result in depriving the city of the highway. That argument cannot be successfully invoked to influence a chancellor to divert a fund from a purpose for which it has been voted specifically by the electorate of the city in pursuance of an ordinance of council declaring the use to which it was to be applied. If the city officials have committed an error by failing to make proper provision for the opening of the boulevard prior to asking the voters of the city to vote means to improve it, the responsibility must rest where it properly belongs. It is clearly no reason for a court of equity to decree that a fund voted for a specific purpose shall be applied to and used for another and different purpose. It would in effect abrogate the constitutional and statutory provisions on the subject. They explicitly provide that the debt of the municipality shall not be increased without the assent of the electors, and that before such assent is given that public notice of the specific purpose for which the money is required shall be given, and that notice shall also be placed on the ballot which the voter casts. In view of these legal requirements and the manifest purpose to protect the taxpayers against an illegal or unnecessary expenditure of the public funds, it would indeed be a strange doctrine to announce that notwithstanding these safeguards, a fund voted for a specific purpose could at discretion be applied to another and different purpose. The proposition finds no support in precedent, is not sustained by reason, and if carried out would be the means of perpetrating a fraud upon the voters who sanctioned the increase of the indebtedness of the city.

We think we must sustain the plaintiff’s contention on both propositions • submitted for our determination. We are of opinion that plaintiff corporation can maintain the bill, and that the city has no right to apply the $500,000, voted for continuing the improvement of the boulevard, to payment of the damages due the landowners by reason of the opening of the boulevard. It, therefore, follows that the prayer of the bill must be granted and that an injunction should be issued.

The decree of the court below is reversed at the costs of the appellees, and it is now ordered, adjudged and decreed that an injunction issue perpetually restraining the mayor of the city of Philadelphia, the director of the department of public works, and the city controller from doing any act by which the said sum of $500,000 shall be transferred from the appropriation to the department of public works (Bureau of Highways) for continuing the improvement of the boulevard from Broad street northeastward to item eighteen (18) in the appropriation to the department of city treasurer for the purpose of paying mandamuses for the opening of said boulevard.


author: Mr. Justice Brown,

text:
    Pittsburg’s Petition.

      Constitutional law — Legislature—Extra session — Proclamation of governor — Act of February 7, 1906, P. L. 7 — Municipalities.
    Where the governor has issued a proclamation convening the general assembly in extraordinary session to meet on a day stated to consider legislation upon certain subjects designated, he may subsequently, before the date of the meeting, issue another proclamation sotting forth additional subjects for the consideration of the general assembly at its extraordinary session.
    The Act of February 7, 1906, P. L. 7, entitled, “An Act to enable cities that are now, or may hereafter be, contiguous or in close proximity, to be united, with any intervening land, other than boroughs, in one municipality; providing for the consequences of such consolidation., the temporary government of the consolidated city, payment of the indebtedness of each of the united territories, and the enforcement of debts and claims due to or from each,” is within the scope of one of the reasons stated by the governor for calling an extra session of the legislature in 1906, viz.: “to enable cities that are now, or may hereafter be contiguous, or in close proximity, including any intervening land to be united in one municipality in order that the people may avoid the unnecessary burdens of maintaining separate municipal governments.”

      Constitutional law — Local legislation — Municipalities—Union of municipalities — Act of February 7, 1906, P. L. 7.
    The Act of February 7, 1906, P. L. 7, entitled “An Act to enable cities that are now, or may hereafter be, contiguous or in close proximity, to be united, with any intervening land other than boroughs, in one municipality; providing for the consequences of such consolidation, the temporary government of the consolidated city, payment of indebtedness of each of the united territories, and the enforcement of debts and claims due to or from each,” dpes not violate section 7, article III of the constitution forbidding local or special legislation.
    The fact that at the time of the passage of the act of February 7, 1906, the cities of Pittsburg and Allegheny were the only ones in the state to which the legislation would technically apply, does not alone make the act unconstitutional. The act applies to coming years as well as to the present.
    March 11, 1907:

      Constitutional law — Due process of law-rAnnexation of cities.

    The Act of February 7, 1906, P. L. 7, is not contrary to that “due process of law,” guaranteed by the Federal constitution, in providing that the electors' of the consolidated territory shall determine the question of the annexation of the lesser city, instead of permitting the majority of the electors of the lesser city to decide it.

      Constitutional law — Article III, sec. 13 of the constitution — Extension of term of public officer — Annexation of cities.

    The tenth section of the Act of February 7, 1906, P. L. 7, which will have the effect of extending the term of councilmen in the city of Allegheny, does not violate article III, sec. 13 of the constitution, which provides that “ no law shall extend the term of any public officer.”
    The substitution of a new system for one under which government has been previously carried on is always accompanied with some shifting of offices and duties, and some inconvenience. To reduce this to a minimum by temporary adjustment of the changes is the province of a schedule.
    Argued Jan. 7, 1907.
    Appeal, No. 22, Oct. T., 1907, by D. Hunter, Jr., et al., and the City of Allegheny, from decree of Superior Court, April T., 1907, No. 37, affirming order of Q. S. Allegheny Co., Deo. T., 1905, No. 71, annexing the city of Allegheny to the city of Pittsburg.
    Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Affirmed.
    Appeal from Superior Court. See 32 Pa. Superior Ct. 210.

      Error assigned was the judgment of the Superior Court.

      W. A. Stone, of Stone & Stone, and Harvey Henderson, with them Wm. G. Gill and ElUott Rodgers, for appellants.

      D. T. Watson and W. B. Rodgers, with them John M. Free-mm and J. Rodgers MeCreery, for appellee.
   Opinion by

Mr. Justice Brown,

On November 11, 1905, the governor of the state called the general assembly into extraordinary session, to meet January 15, 1906, for the consideration of legislation upon seven subjects mentioned in his proclamation. The first was “ To enable contiguous cities in the same counties to be united in one municipality in order that the people may avoid the unnecessary burdens of maintaining separate city governments.” On January 9, 1906, he issued what he regarded as a second proclamation, for he entitles it a “ proclamation.” In it, after calling attention to the approaching extraordinary session, he designates additional subjects for the consideration of the general assembly at said session, one of them being “ To enable cities that are now or may hereafter be contiguous or in close proximity, including any intervening land, to be united in one municipality, in order that the people may avoid the unnecessary burdens of maintaining separate municipal governments. This fourth subject is a modification of the first subject in the original call, and is added in order that legislation may be enacted under either of them, as may be deemed wise.”

The extraordinary session was held, and at it there was passed, among other bills, the one now under consideration, approved February 7, 1906, P. L. 7. It is entitled, “An act to enable cities that are now, or may hereafter be, contiguous or in close proximity, to be united, with any intervening land other than boroughs, in one municipality; providing for the consequences of such consolidation, the temporary government of the consolidated city, payment of the indebtedness of each of the united territories, and the enforcement of debts and claims due to or from each.” The first section is as follows : “ That wherever in this commonwealth, now or hereafter, two cities shall be contiguous or in close proximity to each other, the two, with any intervening land other than boroughs, may be united and become one by annexing and consolidating the lesser city, and the intervening land other than boroughs, if any, with the greater city, and thus making one consolidated city, if at an election, to be held as hereinafter provided, there shall be a majority of all the votes cast in favor of such union.” The question of the consolidation of the cities of Pittsburg and Allegheny was submitted to their lawful voters at an election held in pursuance of the provisions of the act, the result being a majority of 20,154 in favor of consolidation out of a total vote in the two cities of 55,574. Following this election the court of quarter sessions of Allegheny county, on June 16, 1906, “ ordered, adjudged and decreed that the city of Allegheny, the lesser city, be annexed to and consolidated with the city of Pittsburg, the greater or larger city, so that they form but one city and in the name of the city of Pittsburg.” From this decree an appeal was taken to the Superior Court. That court affirmed it: “ Pittsburg’s Petition,” 32 Pa. Superior Ct. 210; and from the decree of the Superior Court we have this appeal, raising the question of the constitutionality of the act of 1906.

One of the objections of the appellants to the constitutionality of the act is that it is not legislation upon a subject designated in the proclamation of the governor calling the special session. This objection is based upon art. III, sec. 25, of the constitution, which provides that When the general assembly shall be convened in special session, there shall be no legislation upon subjects other than those designated in the proclamation of the governor calling such session.”

In the original proclamation the legislation to be considered by the general assembly on the subject of the consolidation of cities was confined to contiguous cities in the same county, and it may be well contended that, as the mandate of the constitution is imperative that the legislature, at the special session, shall pass no law upon any subject not designated in the call, the act is technically without it. The act is not for the consolidation of two contiguous cities, situated in the same county, but for that of any two, contiguous or in close proximity, wherever situated. They may be in different counties. We need not, however, pass upon the sufficiency of the first proclamation to sustain the act as being one of the subjects of legislation designated in it.

Whether the general assembly ought to be called together in extraordinary session is always a matter for the executive alone. IIow it shall be called, and what notice of the call is' to be given, are also for him alone. The constitution is silent as to these matters, and wisely so, for emergencies may arise, such as riots, insurrections, widespread epidemics, or general calamities of any kind, requiring the instant convening of the legislature, and, in the power given to the governor to call it, no time for the notice is too short, if it can reach the members of the general assembly; and with telephones and telegraphs the uttermost portions of the commonwealth can at any time be reached between the rising and the setting of the sun. In this connection it may be noted as significant that the governor is not even required by art. IV, sec. 12, empowering him to call the general assembly together in extraordinary session, to do so by a proclamation, though the same section does provide that in calling the senate in extra session for the transaction of executive business he must do so by proclamation. A proclamation, however, is the proper mode of calling the legislature together, and the constitution seems to so contemplate, for sec. 25, Art. III, speaks of “ the proclamation.” But no form of proclamation is to be followed, and if, after one has been issued, it occurs to the executive that other subjects than those designated in it should be passed upon by the legislature, he can unquestionably issue another, fixing the same time for the meeting of the general assembly as was fixed in the first, and designate other subjects for its consideration. This is, perhaps, what ought to be done when other subjects than those designated in the proclamation are to be brought to the attention of the legislature in special session, and if it had been done in the present case, the objection of the appellants now under consideration would hardly have been raised. This, however, is not for the judiciary, but for the governor alone. The proclamation of January 9 is in effect a second proclamation. In it the governor adopts his original call for the purpose of fixing the time of the meeting of the general assembly, and then proceeds to designate the additional subjects of legislation. "With every presumption in favor of compliance by the executive with the constitutional requirements relating to his calling the general assembly together in extraordinary session, it would be judicial hypercriticism to declare his second notice or proclamation insufficient to authorize the legislature to pass the act under consideration.

The objection most strenuously urged against the act is that it violates art. III, sec. 7, of the constitution, which prohibits the legislature from passing any local or special law regulating the affairs of cities. Is the act local or special, or is it general in its provisions? It provides for the consolidation of two cities of no particular class, but of any two cities belonging to the same or different classes, wherever situated and whether in the same or in different counties. Whether two cities ought to be consolidated is purely a legislative question, and the general act providing for their consolidation is not forbidden legislation. The power of the legislature to provide for the annexation of cities is not limited by the constitution. What it may not" how do is to regulate, by a local or special law, the affairs of cities. In providing for the annexation of any two cities of the commonwealth there is no regulation of the affairs of any two particular cities. The provision is simply for such annexation, if certain natural and, what may be regarded as necessary, conditions exist. The legislature might, without transgressing the constitution, have provided for the consolidation of cities without regard to the distance between them, absorbing in their consolidation all the intervening space, whether occupied by boroughs or townships. But such legislation is not conceivable, for the common sense of the people would not tolerate it. In providing for annexation in the act of 1906, the legislature restrained its power, to authorize consolidation in declaring that certain natural, reasonable and necessary conditions must exist, if two cities are to be united. No arbitrary, unnecessary conditions are prescribed; only reasonable ones are required. The legislature might have limited the right to consolidate to contiguous cities, but it extended this right to those in close proximity. While it is purely a legislative matter to determine what cities may be consolidated, it is clear that only those ought to be which are contiguous or in close proximity; and, in making contiguity or close proximity a condition of the right to consolidate, the affairs of no special city are regulated.

By the act any two cities contiguous or in close proximity may become one. No two contiguous cities are excluded from its provisions, and any two in close proximity may be united, provided that by their union they do not absorb and swallow up an intervening borough. The act does not prevent the consolidation of cities in close proximity between which there may be a borough, if that borough does not embrace all the land between them, or does not extend as a wedge throughout the entire length of the same. If a borough occupies all the land between two cities, they cannot be united without absorbing such borough. They touch at no point, are not contiguous, and are not in close proximity within the meaning of the act. But if the land between two cities in close proximity is not wholly occupied by a borough, or a borough does not extend throughout the entire length as a wedge in such intervening land, and there is township land connecting the cities at any point or points, they can be consolidated under the act, the township land becoming a part of the new city and the borough retaining its municipal existence. The act is, therefore, one, and must be so read, permitting the consolidation of any two cities contiguous or in close proximity, of whatever class and wherever situated, provided only that in such consolidation the separate existence of an intervening borough shall not be destroyed. If a borough occupies all of the space between them, they are not contiguous, and, though in close proximity they cannot physically unite without wiping out the borough. But, if a borough should not be all of the intervening land, they can unite by absorbing that land which the borough does not occupy — the intervening land beyond the borough limits — leaving it to continue its independent municipal life. At this point it may be well to call attention to the clear line of demarcation between this act and that of April 20, 1905, P. L. 221, known as the Cook Law, and declared to be unconstitutional in Sample v. Pittsburg, 212 Pa. 533. It provided for the annexation of a smaller to a larger city when the two were contiguous and situated in the same county, and, for the purposes of the act, it was declared that cities separated by a stream, river or highway shall be included under the term contiguous.” So clearly was it bald, special local legislation that it might well have been labeled an act for the consolidation of the cities of Pittsburg and Allegheny. In forceful language our Brother "Mestrezat demonstrated the act to be local and special, and we quote at length from his opinion, for the converse of what he says of it is true of the act of 1906 : “ The title of the act clearly indicates the subject of the enacting part and discloses the local and special features of the statute. It shows that the act was not intended to apply to any two cities of the state so as to make it general in its operation, but conditions are imposed which restrict its application to certain cities, thereby dopriving the other cities of the state of the benefit of its provisions. The statute is operative ‘ where two cities are contiguous and in the same county.’ Its provisions can be invoked to annex only two cities and when they are thus situated. Two cities of this description may be annexed to each other and all others are excluded from the operation of the statute. As we take judicial cognizance of the municipal divisions of the state as well as of their location, we know as averred in'the bill and not denied in the answer, that the cities of Allegheny and Pittsburg in Allegheny county are the only two contiguous cities in the state, and that there are no two contiguous cities in any other county in the state. The act, therefore, is limited in its operation to these two cities, and the effect or result of the legislation is the same, and the act as clearly special, as if the names of the two cities had been written in the statute instead of the periphrase used in the description of the cities subject to its operation.

“ The identification of the two cities intended to be affected by the act is also aided by the provision of the statute that ‘ for purposes of this act, cities separated by a stream, river or highway shall be included under the term contiguous.’ Aside from the contention that the act applies only to cities separated by a stream, river or highway, this clause of tbe act clearly suggests the two Allegheny county cities as the cities subject to its operation. "We judicially know that Pittsburg and Allegheny áre the only two cities in the commonwealth separated by a stream or highway, and the fear that that fact would render those cities not contiguous within the meaning of the statute moved the promoters of this legislation to further identify them by inserting this clause in the act. This feature should not and cannot be ignored when the court is called upon to test the constitutionality of the statute, as it clearly earmarks the legislation as local and special.

There is no merit in the contention that at some time in the future there may be two other cities which may become contiguous and in that event can be consolidated under the provisions of the act. "With a knowledge of the facts, known to the legislature as well as to the court, this is not within the range of probability, but a possibility so remote that it must be excluded from consideration in determining the constitutionality of the statute. It could only occur if a community adjacent to any of the cities of the state should become sufficiently populous to enable it to become a city and should take the necessary legal steps to make itself a city and subject to the operation of the act, or if the boroughs lying between and connecting certain cities of the state should, by the requisite legal proceedings, be annexed to those cities or form themselves into a city and thereby connect two existing cities so as to make the act operative. These are simply contingencies within the realm of speculation and entirely too remote to support legislation otherwise repugnant to the constitutional mandate.

“ The statute requires any two cities desirous of availing themselves of its provisions to be located in the same county. This confines the act in its operation to cities within certain territorial limits and brings it within the domain of special legislation, prohibited by the constitution. The act does not attempt to classify cities on any basis whatever. It provides simply that it shall operate upon two cities situated in the same county. It, therefore, excludes from its provisions and denies its privileges to all cities separated by a county line, or which are not wholly within the same county, although occupying contiguous territory. All cities whose boundaries are coterminous with the county line are perpetually excluded from the operation of the statute, although other- cities may adjoin them at different parts of their boundaries. This distinction made in the act between the cities of the commonwealth is not based upon necessity nor upon any grounds which the law recognizes as justifying classification. Its effect is to restrict the operation of the statute to two cities located in the same territorial division of the state; and when considered in the light of the conceded facts, it fixes with unmistakable certainty the two cities to be consolidated under its provisions. A clearer or more palpable attempt to evade the constitutional prohibition against special and local legislation is not disclosed in any of the numerous bills introduced in the general assembly since the adoption of the present constitution, not excepting the statute, which Mr. Justice Paxson in Commonwealth v. Patton, 88 Pa. 258, very properly characterized as ‘ classification run mad.’ ”

But what of this act? Its operation is not confined “to cities within certain territorial limits.” It is general in its terms and refers to no classes of cities, but to all cities. It does not provide that it shall operate only “ upon two cities situated in the same county.” It does not exclude “ from its provisions and deny its privileges to all cities separated by a county line, or which are not wholly within the same county,” but extends them to any two cities within the commonwealth having natural, reasonable and necessary conditions of consolidation.

Counsel on both sides of this controversy have cited many cases on the classification of cities. By the appellant we are referred to them as requiring us to declare the act local and special, regulating the affairs of cities, and, for the appellee, they are cited to sustain it; but as classification is not involved in the act, we need not consider the cases on that subject. That it applies now, and for the present can apply, only to the cities of Pittsburg and Allegheny, and that it was passed for them, can make no difference if the legislation is general in form and substance, and is not within the prohibition of the constitution: Wheeler v. Philadelphia, 77 Pa. 338. Individual needs and requirements are responsible for much legislation which now must be general, and, when it is so, the causes that lead to it, or the particular purposes it is to serve at the time of its enactment, have nothing to do with its constitutionality. It may meet at the time of its passage the wants of but one community, but if in the future it will meet these same wants in all other communities the legislation is as general as if at the time of its passage there had been no special reason calling for it.

The method of consolidation is said to be unconstitutional, because it is not by “ due process of law,” “ in that it permits qualified electors of the larger city to overpower or outnumber those of the lesser city, and to annex the lesser city without the vote or consent of a majority of the qualified voters or electors of the lesser city.” This is completely answered in the following extract from the opinion of the learned judge speaking for the Superior Court: “ In determining whether this act is contrary to that due process of law ’ guaranteed by the federal constitution, in providing that the electors of the consolidated territory shall determine the question of annexation of the lesser city instead of permitting the majority of the electors of the lesser city to decide it, we have many adjudicated cases which warrant the action taken by the legislature. The words < due process of law,’ as taken from Magna Charta and incorporated in the constitution, ‘ were intended to secure the individual from the arbitary exorcise of the powers of goverrnent, unrestrained by the established principle of private rights and distributive justice.’ In each particular case the words mean ‘such an exercise of the powers of government as the settled maxims of law permit and sanction, and under such safeguards for the protection of individual rights as those maxims prescribe for the class of .cases to which the one in question belongs : Cooley’s Constitutional Limitations, 434. The people of the municipalities do not define for themselves their own rights, privileges and powers, nor is there any common law which draws a definite line of distinction between the powers which may be exercised by the state and those which must be left to the local governments: 2 Kent’s Commentaries, 278, 279. The general principle is that when the state is acting in the sovereign capacity, it acts for the whole commonwealth, and private rights and interests must yield to this paramount object. Private rights may be and very frequently are interfered with by either the legislature, executive or judicial departments of the government, and the creation of municipal corporations, and the conferring upon them of certain powers and subjecting them to corresponding duties, does not deprive the legislature of the state of that general control over their citizens which they before possessed. It still has authority to amend their charters, enlarge or diminish their powers, extend or limit their boundaries, consolidate two or more into one, and overrule their legislative action whenever it is deemed unwise, impolitic or unjust, and even abolish them altogether in the legislative discretion and substitute those which are different : Cooley’s Constitutional Limitations, 228. Restraints on the legislative power of control must be found in the constitution of the state, or they must rest alone in the legislative discretion. If the legislative action operates injuriously to the municipalities or to individuals, the remedy is not with the courts. The courts have no power to interfere, and the poo-pie must be looked to, to right through the ballot box all these wrongs : Ervine’s Appeal, 16 Pa. 256; Cooley’s Constitutional Limitations, 228, 229,230. The act in question has been passed with all the forms and ceremonies requisite to make it a valid statute. The legislature' was properly convened and kept well within its powers in regulating the affairs of cities by a general law in accord with the requirements of the constitution.

“ It follows under the law of the land, that neither the municipality as such, or any of the persons residing therein, have any vested rights in the municipal powers, as against the state which created the municipality. It is merely an agency instituted by the sovereign for the purpose of carrying out in detail the objects of government — essentially a revocable agency —subject to legislative control which may destroy its very existence with'the mere breath of arbitrary decision:’ Phila. v. Fox, 64 Pa. 169.’’

Authorities everywhere support the foregoing. In our own cases may be found the following: “The city of Philadelphia is beyond all question a municipal corporation, that is, a public corporation created by the government for political purposes, and having subordinate and local powers of legislation: 2 Kent’s Com. 275; an incorporation of persons, inhabitants of a particular place, or connected with a particular district, enabling them to conduct its local civil government: Glover, Mun. Corp. 1. It is merely an agency instituted by the sovereign for the purpose of carrying out in detail the objects of government — essentially a revocable agency — having no vested right to any of its powers or franchises — the charter or act of erection being in no sense a eontract with the state — and therefore fully subject to the control of the legislature, who may enlarge or diminish its territorial extent or its functions, may change or modify its internal arrangement, or destroy its very existence, with the mere breath of arbitrary discretion. Sic volo, sic jubeo, that is all the sovereign authority need say. This much is undeniable, and has not been denied. . . . The sovereign may continue its corporate existence, and yet assume or resume the appointments of all its officers and agents into its own hands; for the power which can create and destroy can modify and change: ” Sharswood, J., in Philadelphia v. Fox, 64 Pa. 169. “ Municipal corporations are agents of the state, invested with certain subordinate governmental functions for reasons of convenience and public policy. They are created, governed, and the extent of their powers determined by the legislature, and subject to change, repeal, or total abolition at its will. They have no vested rights in their office, their charters, their corporate powers, or even their corporate existence. This is the universal rule of constitutional law, and in no state has it been more clearly expressed and more uniformly applied than in Pennsylvania. . . . The fact that the action of the state towards its municipal agents may be unwise, unjust, oppressive, or violative of the natural or political rights of their citizens, is not one which can be made the basis of action by the judiciary: ” Commonwealth v. Moir, 199 Pa. 534.

Finally, in a supplemental brief, counsel for appellant contend that sec. 10 of the act, which will have the effect of extending the term of councilmen in the city of Allegheny, violates art. III, sec. 13 of the constitution, which provides that “ no law shall extend the term of any public officer.” This objection does not seem to be seriously pressed and as to it we need only repeat what was said in Commonwealth v. Moir, supra: “ The substitution of a new system for one under which government has been previously carried on is always accompanied with some shifting of offices and duties, and some inconvenience. To reduce this to a minimum by temporary adjustment of the changes is the province of a schedule. In well-considered legislation which involves such changes a schedule of temporary expedients is usually and properly added, and the expedients provided would need to be very clearly unconstitutional to justify a court in overturning them. In Lloyd v. Smith, 176 Pa. 213, it is said: ‘In an exchange of offices there may naturally be some overlapping of terms and duties, and if in the legislative view the need for a controller was immediate, but the existing terms oh the auditors prevented his present assumption of all the duties that would finally pertain to his office, it would not have been unwise, certainly not unconstitutional, to meet the case by a temporary expedient.’ ”

The assignments of error are all dismissed and the decree of the Superior Court is affirmed at appellants’ costs.


author: Mr. Justice Potter,

text:
    Keane, Appellant, v. Moffly.
    March 11, 1907:

      Corporations — Stockholders — Insolvent corporation — Reorganization committee — Assessments—Time limit.

    Where the reorganization committee of stockholders of an insolvent corporation offer a plan of reorganization to the stockholders, with a time limit within which assessments on the stock to carry out the plan are to be paid, a stockholder who has not paid his assessment within the time specified has no standing thereafter to compel the committee to receive the assessment merely because the committee has accepted assessments from other stockholders after the time specified had expired.
    Argued Jan. 25, 1907.
    Appeal, No. 384, Jan. T., 1905, by plaintiff, from decree of C. P. No. 1, Phila., Co. Sept. T., 1904, No. 891, sustaining demurrer to bill in equity in case of Philip Keane v. John W. Moffly, Simon G-ratz, Nicholas Brice, Charles W. Henry, Wm. H. Arrott, Samuel F. Houston, Wm. Botch Wister, E. J. Berwind, John T. Terry, Thomas J. Drummond and W. K. Stager, known as the “ Moffly Beorganization Committee of the Consolidated Lake Superior Company,” and the Lake Superior Corporation.
    Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter and Stewart, JJ.
    Affirmed.
    BiHMo^equityJLr a, mandatorvJmyanddon.
    The avermentTof the bill and the grounds of demurrer are set forth in the opinion of the Supreme Court.

      Error assigned was decree sustaining the demurrer.

      Wm. O. Armstrong, for appellant.

      P. F. Pothermel, for appellees.

      Wm. Meade Fletcher, for The Lake. Superior Corporation.
   Opinion by

Mr. Justice Potter,

This was a bill in equity filed by the plaintiff against John W. Moffly et al., known as the “ Moffly Reorganization Committee of the Consolidated Lake Superior Company,” and the Lake Superior Corporation. It is alleged in the bill that plaintiff owned 1,200 shares of the common stock of the Consolidated Lake Superior Company ; that said corporation during the latter part of 1902 became insolvent and shortly after-wards a receiver was appointed therefor; that thereafter during the year 1903, a committee known as the “Moffly Reorganization Committee of the Consolidated Lake Superior Company,” was formed for the purpose of devising ways and means to raise funds to reorganize the said Consolidated Lake Superior Company; that said committee decided that this purpose should be accomplished by assessing upon the owner of each share of the common and preferred stock of the said Consolidated Lake Superior Company, an assessment of $3.00 per share, to be paid to the reorganization committee to provide working capital, etc., and that a new company should be formed whose capital stock should consist of one class of stock only, which, together with certain income bonds, should be distributed to the stockholders of the old company in such proportions as were designated by the committee. That the said reorganization committee fixj¡d,Jfey*I7, 1904, as_Jhe last day on which the aforesaid assessment could be paid. The committee officially notified the stockholders of the old company of the plan for reorganization, together with the fact that after said date, no more assessments would be received. The plaintiff did not pay his assessment upon the date named, but he avers that on July 19, 1904, immediately upon his discovery that the committee and corporation were receiving assessments of certain other stockholders, notwithstanding the time had gone by, he tendered the assessment upon his shares; but the said committee and corporation refused to accept it. lie therefore prays that the defendants be required to accept from him his stock, together with the assessment of $3.00 per share thereon, and that he be permitted to participate in the reorganization.

The defendants demurred to the bill, setting forth among other things that the bill was defective in that it did not show privity, or set forth any trust relationship between the committee and plaintiff, with reference to the stock of the old company, or the alleged new corporation ; that the time for making tender had elapsed at the time plaintiff tendered his stock ; that no trust relationship between plaintiff and defendants had been shown, and that even if defendants did voluntarily accept from other stockholders assessments after the date named, they had a legal right so to do, and to refuse to accept plaintiff’s tender. The court below sustained the demurrer without filing any opinion.

It is sufficient for us to say that the bill does not show that, the plaintiff participated or was in any way interested in the formation of the reorganization committee; and it does not appear that the plan of' reorganization vests any rights in any persons except those who have accepted and agree to be bound by the terms thereof. The members of the committee/ owe no obligation to any stockholder, as such. They had a right to limit the terms of subscription to the reorganization scheme in any manner which they deemed to be for their best interests. As a matter of fact, they did determine to offer the privileges of joining in their plan, to such stockholders as would pay the assessment of $3.00 a share before May 17, 1904. The stockholders who did make such payment within the time limited had then a clear right to proceed with the plan of reorganization, and those who did not pay the required assessment had no just reason to complain. There was no privity of contract, or any relation of trust between the stockholders who formed the reorganization committee, and the other stockholders who did not see fit to join them, or comply with the terms offered to them. by the committee. An opportunity was given to the plaintiff to participate in the new enterprise by coming in within the time fixed and making payment of his proportionate assessment. That he did not do so was perhaps his misfortune; but there is no ground in law or equity upon which his claim to force his way into the organization after the time fixed by the committee, can be sustained: Landis v. Western Penna. Railroad Co., 133 Pa. 579. We see no error upon the part of the learned court belong in sustaining the demurrer.

The assignment of error is overruled, and the decree is affirmed.