PROPERTY INCLUDED.

In Pennsylvania the real estate of quasi public corporations, unless exempt from such taxation by statute, is taxed by including the value thereof in the assessment of the capital stock.

[Ed. Note.-For other cases, see Taxation, Cent. Dig. § 626; Dec. Dig. § 378.*]

Appeal from Court of Common Pleas, Luzerne County.

Action by the Conoy Township Supervisors against the York Haven Electric Power Plant Company. From a judgment for defendant, notwithstanding the verdict, plaintiff appeals. Affirmed.

Argued before MITCHELL, C. J., and FELL, BROWN, MESTREZAT, POTTER, ELKIN, and STEWART, JJ.

Bernard J. Myers and Wm. R. Brinton, for appellant. W. U. Hensel, for appellee.

ELKIN, J. It has been uniformly held in Pennsylvania that the real estate of a public, or quasi public, corporation, essential to the exercise of its corporate franchises is not subject to local taxation in the absence of legislative authority imposing such taxes. The power to tax necessarily includes the power to sell for nonpayment of taxes, and thus the property of a public corporation, without which it could not perform its duties to the public, could be sold piecemeal, and the corporate purpose be defeated by divesting the title to certain portions of the real estate against which tax liens were filed. Again, many quasi public corporations extend into and through different municipalities, and as a question of public policy, it has not been deemed wise to subject them to the exactions of the taxing officer at every municipal division line, but rather to authorize the commonwealth to impose a capital stock tax upon such corporations; and, in appraising the same for the purpose of taxation, the real estate, franchises, earning power, dividends, and all other matters which affect the value thereof, must be taken into consideration. In this manner the real estate of a quasi public corporation is taxed, and while the tax goes directly to the state in the first instance, cities, boroughs, townships, school districts, and other municipal divisions receive the benefits of such taxation by appropriations made to the public schools, to hospitals, to eleemosynary institutions, and to charities of different kinds located throughout the state. But without further discussion of the policy

of the law, which is the foundation of the rule, it is settled in this state that the words "real estate," in our taxing statutes, do not include lands or appurtenances essential and necessary to the exercise of the franchise of a public corporation. Lehigh Coal & Navigation Company v. Northampton County, 8 Watts. & S. 334; Berks County v. Railroad Co., 6 Pa. 70; Schuylkill Navigation Co. v. Berks County, 11 Pa. 202; Wayne County v. Canal Co., 15 Pa. 351; Railroad Co. v. Sabin, 26 Pa. 242; West Chester Gas Co. v. Chester County, 30 Pa. 232; Coatesville Gas Co. v. Chester County, 97 Pa. 476; Pittsburg's Appeal, 123 Pa. 374, 16 Atl. 621; Roaring Creek Water Co. v. Girton, 142 Pa. 92, 21 Atl. 780; Northampton County v. Easton Pass Railway Co., 148 Pa. 282, 23 Atl. 895; Spring Brook Water Co. v. Kelly, 17 Pa. Super. Ct. 347; St. Mary's Gas Co. v. Elk County, 191 Pa. 458, 43 Atl. 321; Southern Electric Light & Power Co. v. Phila., 191 Pa. 170, 43 Atl. 123; Philadelphia v. Electric Traction Co., 208 Pa. 157, 57 Atl. 354. These and other similar cases hold that the real estate of turnpike, navigation, canal, railroad, street railway, artificial and natural gas, water, and electric light and power companies, essential and necessary to the exercise of their corporate franchises, is not subject to taxation for local purposes. The only question in the present case is whether appellee is a quasi public corporation within the meaning of the law, so as to entitle it to exemption from local taxation.

The learned court below so held, and, after careful consideration, we have reached the same conclusion. If companies incorporated to supply water, electricity, and light to the public, are exempt from local taxation,, under the rule hereinbefore mentioned, it is difficult to see why a company incorporated for the express purpose of supplying water and power should occupy a different position. So far as the power of taxation is involved, there is no difference in principle between a company incorporated to supply water or electricity to the public and one incorporated to supply both water and water power, which produces electricity for the same purpose. The test in such cases is not what the cor.poration has done, or what it may attempt to do, but what it is authorized to do, and may be compelled to do, under its charter in the performance of the duties imposed thereby. Measured by this standard, and there is no other, there can be no doubt about the pur. pose for which the appellee company was incorporated, nor about what duties to the public it may be compelled to perform. The York Haven Water & Power Company was created under General Corporation Act April 29, 1874 (P. L. 74) § 2, cl. 9, and the several supplements thereto. It does not appear in the application for the charter, nor in the letters patent, what particular supplemental

statutes it claims the benefit of, but it is specifically stated that the corporation is formed "for the purpose of supplying water and power to the public and to firms, individuals and corporations in the borough of York Haven, York county, Pennsylvania, and the territory adjacent thereto."

A corporation organized for the purpose of supplying water to the public has been held to be a quasi public corporation, and it has also been decided that a corporation created for the supply, storage, and tran-portation of water and water power for commercial and manufacturing purposes is a quasi public corporation. It would therefore seem to necessarily follow that a corporation possessing the power to do both of these things is no less a quasi public corporation. Indeed the argument would seem to be in favor of the company enjoying the greater power. It is argued, however, that the appellee company does not supply water or power to the public and firms and individuals and corporations in the borough of York Haven, and that what it attempts to do cannot, in any sense, be considered to be a service to the public, or that the public has a right to compel the performance of any duty to it. The answer to this contention is that the powers, privileges, and duties of a corporation are fixed by its charter, and in a legal proceeding must be determined by the requirements of the charter, and in a case involving the right to impose a tax, the question whether or not such corporation may be exceeding its corporate powers, or has failed to perform duties owed to the public, cannot be raised and determined. In this proceeding the question of whether the appellee is a quasi public corporation must be determined by the powers granted in the charter, and not by evidence dehors the record tending to show that the corporation may be engaged in business not of a public character. If the corporation is exceeding its corporate powers, the commonwealth alone, at the suggestion of the Attorney General, has the right to raise that question. Clearly, however, under the recent case of Jacobs v. Clearview Water Supply Company, 220 Pa. 388, 69 Atl. 870, a company incorporated for the purpose of supplying water and water power for commercial and manufacturing purposes, as well as a company supplying water to the public for domestic pur poses, is a public corporation.

This case has been exceptionally well prepared and very ably argued by counsel on both sides. The learned counsel for appellant have made an exhaustive examination of the statutes and decisions relating to the subject; and, if we did not consider it a departure from the settled policy of law, much that has been said in behalf of appellant would appeal to us with great force. However, in a long and unbroken line of cases, extending back for a period of more than 80

years, it has been the policy of the law to tax the real estate of quasi public corporations, except those exempted from such taxation by statute, by including the value thereof in the assessment of the capital stock, and we are not convinced that a distinction can be made in the case at bar without making a departure from what must be considered the settled rule in such cases.

Assignments of error overruled, and judgment affirmed.

(222 Pa. 325)

JONES et al. v. LINCOLN SAVINGS & TRUST CO.

(Supreme Court of Pennsylvania. Nov. 2, 1908.)

COURTS (§ 475*)—ConcurreNT JURISDICTION— APPOINTMENT OF RECEIVERS.

Where a receiver is appointed for a trust company under a stockholder's bill for the preservation of the assets, he is not superseded by a receiver appointed at the instance of the Attorney General by another court, under a bill to dissolve such corporation, under Act Feb. 11, 1895 (P. L. 4), creating a banking department of the commonwealth.

[Ed. Note.-For other cases, see Courts, Cent. Dig. §§ 1236, 1237; Dec. Dig. § 475.*]

Appeal from Court of Common Pleas, Philadelphia County.

Action by Jeremiah C. Jones and others against the Lincoln Savings & Trust Company. From an order discharging the rule to set aside the appointment of a receiver, the Commonwealth appeals. Affirmed.

Willson, P. J., of the court below filed the following opinion:

"On the application of the plaintiff, a stockholder of the defendant corporation, this court, on June 18, 1908, appointed Samuel D. Hyneman, Esq., receiver of the said corporation, with the usual powers of such an officer. It was not alleged in the plaintiff's bill that the assets of the corporation were insufficient to pay its debts. Indeed the contrary was alleged, while at the same time it was, in effect, averred that the appointment of a receiver was necessary to protect the interests of creditors and to prevent a wasteful sacrifice of the assets. The regularity of the appointment of the said receiver is not questioned, but we are asked by the Attorney General, for reasons stated in his petition, to supersede-that is, annulthe decree made by this court, and to direct the receiver named by us to turn over all the assets and property of the said corporation which have come into his possession to Charles F. Warwick, Esq., a receiver appointed by the court of Dauphin county, in proceedings instituted by the Attorney General in the name of the commonwealth. These proceedings were taken under what is commonly known as the 'Banking Act of 1895' (P. L. 4). We do not question the validity or the propriety of the action taken by the

Dauphin county court. The act of Assembly just referred to was designed to furnish, and does furnish, a method, under which the banking business of state banking institutions can be regulated and controlled, with a view to securing honest and safe management of such institutions. A system of procedure is provided for that purpose, and the purpose is most laudable and salutary. We would not deliberately interfere with the successful operation of any of the means or machinery furnished by the statute to accomplish the end in view. If, by reason of the provisions of the statute, all proceedings instituted in a regular manner for the purpose of protecting the interests of creditors, in which a court of competent jurisdiction has appointed a receiver to take and hold the assets of a corporation, are avoided and nullified, then undoubtedly it is our duty to do what the Attorney General asks us to do, and to direct our officer to stay his hands and turn over to the receiver appointed in Dauphin county all the assets that have come into his possession. Whether or not that be the effect of the statute, and our duty depends upon the proper answer to this single question, is the jurisdiction of the court in Dauphin county, which took cognizance of the matter at the instance of the commonwealth, exclusive? Do proceedings there instituted necessarily supersede and avoid all other proceedings regularly and previously instituted in a court of competent jurisdiction for the settlement of the affairs of a corporation? In other and fewer words, the question is, Did the action of the Dauphin county court, resulting in the appointment of a receiver, operate to prevent this court and its receiver from moving forward, in an orderly and ordinary way, towards the end of litigation, which had been here begun before the Dauphin county court took a step in the matter? We need consider no other question. All of the specific reasons urged upon our attention by the Attorney General are wrapped up in the contention that, when the court in Dauphin county made its decree appointing a receiver, the bars were raised against any further proceeding by this court under the bill filed here.

"We are not able to agree with that view of the question, not because we think it to be of any importance who shall receive the fees or commissions that may accrue to a receiver, but because we fail to find in the statute any provision which gives to the proceedings brought in the name of the commonwealth any such exclusive force as is claimed for them. We have not been asked by the plaintiff to do anything which the statute referred to above authorizes. We are not asked to dissolve the corporation. We are not asked to give time for making good an impaired capital, or to make a decree based upon proofs of unsafe or improper conduct of business. On the contrary, we are

ary and often afforded, and which has no reference whatever to the remedies of a public character that the statute affords. So far as we can see, there is nothing in any proper action which we have taken, or may hereafter take, in the case, that will interfere with the commonwealth's effecting all that ought to be done, in any interest which needs to be guarded, without impinging upon the previously acquired jurisdiction of this court. We have said that we do not find in the statute any grant of exclusive jurisdiction over the case to the court of Dauphin county. This might be owing to some want of perception on our part, but we may go further, and say that no such express grant has been pointed out to us by the Attorney General. In the absence of that which would deprive us of the jurisdiction already taken of the case as it stands before us, we know of no rule of law, or requirement of public policy, which demands that we should vacate the decree made by us. There is, besides, a certain amount of respect for our own tribunal that we are bound to recognize. It would be difficult to give reasons for such a thought more cogent than those uttered on behalf of the Supreme Court of this state, by its present learned Chief Justice, in the case of Commonwealth v. Order of Vesta, 156 Pa. 531, 27 Atl. 14, and substantially reiterated in Fraternal Guardians' Assigned Estate, 159 Pa.. 594, 28 Atl. 482.

"Aside, however, from there being in the statute no express bar against our jurisdiction, and aside, also, from the consideration just referred to, the statute itself, in the fourth and eleventh sections, seems to show that the Legislature intended to preserve the jurisdiction of other courts of the commonwealth over matters which were already within their jurisdiction. In section 4 appears the provision 'and the said corporation shall not be subject to any other visitorial power than such as may be authorized by this act, except such as are vested in the several courts of law.' Section 11 reads as follows: 'No corporation subject to the supervision of the banking department shall be subject to any visitorial power other than such as are authorized by this act, or are invested by law in the courts of this Commonwealth.' It seems to us that these express provisions of the statute are totally at variance with the position now taken on behalf of the commonwealth, and that upon the basis of these alone we might well decline to put the plaintiff out of court by granting the application under consideration.

"The case of Kittanning Ins. Co., 146 Pa. 102, 23 Atl. 336, is cited to us as controlling the situation with which we have to deal, but we do not ascribe to it the weight which it appears to have in the mind of counsel. That case arose under the insurance act, which undoubtedly in many respects resembles the banking act. The lower court took

tion of the corporation. The court made a decree dissolving the corporation and ap pointing a receiver. On appeal to the Supreme Court, in a per curiam opinion, it was held that the lower court had no power to dissolve the corporation, and in what seems to have been no more than an obiter dictum it was intimated that, where a receiver should be appointed in the court of Dauphin county, he would supersede the officer appointed in the court below. We do not regard this remark as conclusive of the question, even in a case arising under the insurance act. It is far less applicable to the present case, for the reason that the statute last referred to does not recognize, as does the banking act, the right of courts other than the court of Dauphin county to preserve and exercise their jurisdiction over matters that do not arise out of the statute.

"The question under discussion is pre-eminently one for final determination on appeal. We have expressed in this opinion the views that have led us to the conclusion that the rules granted upon the petitions of the Attorney General and of the receiver appointed in Dauphin county should be discharged."

Error assigned was order discharging rule to set aside appointment of receiver.

Argued before MITCHELL,. C. J., and FELL, BROWN, MESTREZAT, POTTER, ELKIN and STEWART, JJ.

M. Hampton Todd, Atty. Gen., and J. Edgar Butler, for the Commonwealth. John G. Johnson, Charles E. Bartlett, and Samuel M. Clement, Jr., for appellee.

PER CURIAM. Judgment affirmed by a majority of this court on the opinion of the court below.

(222 Pa. 311)

LONG v. LEMOYNE BOROUGH. (Supreme Court of Pennsylvania. Nov. 2, 1908.)

1. MUNICIPAL CORPORATIONS (§ 107*) - BOROUGHS-LOAN OF MONEY-RESOLUTIONS.

Under Act May 23, 1893 (P. L. 113), requiring that every resolution shall be presented to the chief burgess for approval, a resolution of a borough council authorizing the borrowing of money for municipal purposes, and the giving of a judgment note not approved and signed by the chief burgess, is invalid, and a judgment entered against the borough would be stricken off.

[Ed. Note.-For other cases, see Municipal Corporations, Cent. Dig. §§ 230, 231; Dec. Dig. § 107.*]

2. MUNICIPAL CORPORATIONS (§ 249*) - LOAN TO BOROUGH-RECOVERY.

Money loaned to a borough under an invalid resolution and used by it may be recovered in an action for money had and received, though the note given therefor is invalid.

[Ed. Note. For other cases, see Municipal Corporations, Dec. Dig. § 249.*]

3. MUNICIPAL CORPORATIONS (§ 231*) -CONTRACTS-INTEREST OF OFFICERS.

Act March 31, 1860 (P. L. 400) § 66, preventing a member of a borough council from profiting by any contract for the sale or furnishing of any supplies or materials to the borough, does not apply where a borough council authorizes a loan from a bank, and a member of the council is also a member of the banking association.

[Ed. Note.-For other cases, see Municipal Corporations, Cent. Dig. § 661; Dec. Dig. § 231.*]

Appeal from Court of Common Pleas, Cumberland County.

Action by S. W. Long, for the use of the Cumberland Valley Bank, against the Lemoyne Borough. From an order discharging the rule to strike off judgment, defendant appeals. Reversed.

Argued before FELL, BROWN, MESTREZAT, POTTER, and ELKIN, JJ.

E. M. Biddle, Jr., for appellant. Sadler and C. S. Brinton, for appellee.

S. B.

BROWN, J. The borough of Lemoyne was incorporated May 23, 1905. The first meeting of its council was held July 26th following. The new borough being without funds to enable it to start properly on its municipal career, its council on October 31, 1905, passed the following resolution: "Resolved, that the borough of Lemoyne borrow from the Cumberland Valley Bank for general borough purposes the sum of ($500) five hundred dollars and that the president of town council and borough treasurer be authorized and directed to execute a note in the name of the borough of Lemoyne, and attested by the secretary, to said Cumberland Valley Bank for said loan of ($500) five hundred dollars and all renewals of the same." To secure this loan of $500 a judgment note was executed in that sum on November 3, 1905, by the president of the town council and attested by the secretary, payable 90 days after date to the order of S. W. Long, the borough treasurer, A copy of the resolution of October 31st, signed by the president of the town council and duly certified by the secretary, was presented to the bank, and upon the assignment of the note to it by Long as treasurer the same was discounted by the bank and the proceeds placed to his credit as borough treasurer. The borough subsequently made three other loans from the bank in the same way-one for $1,000, one for $2,000, and the third for $1,000. The resolutions authorizing these loans were in the same form as the one of October 31st, and the notes were in the same form as that given for $500 on November 3d; the only difference being in the amounts. Shortly after the last loan was made on February 27, 1906, all the notes were consolidated into one of the same form for $4,500, payable to the order of S. W. Long, treasurer, which he assigned to the bank. At

the municipal election in February, 1906, new councilmen were elected; only one of the old members holding over. The new council refused to recognize the obligation for $4,500 held by the bank, and, when judgment was entered upon it, a rule was taken to show cause why it should not be opened and stricken off on the grounds (1) that no legal action had been taken by the borough authorizing the loans; (2) that, when the resolutions were passed authorizing the loans, a majority of the members of council were members of a partnership association conducting the said Cumberland Valley Bank, and the loans were therefore void under section 66 of the act of March 31, 1860 (P. L. 400); and (3) that a portion of the money borrowed from the bank had been illegally expended by the borough in making improvements. The rule granted was discharged, and from the refusal of the court to interfere with the judgment we have this appeal.

No one of the four resolutions directing the loan to be made was presented to the chief burgess for his approval. It is true he was present when each of them was passed, and he personally applied to the bank for the loans. Under this state of facts the court below was of opinion that he had impliedly approved the resolutions. But this is not the kind of approval recognized by the statute when approval is essential to the validity of an ordinance. The requirement of the act of May 23, 1893 (P. L. 113), is that every resolution shall be presented to the chief burgess, and, if he approve it, he shall sign it. It must be expressly approved by him, and the evidence of such approval is that he has signed it. If the resolutions were of such a character as to require the approval of the borough's chief executive, they never became operative, and the judgment for $4,500 against the borough was confessed by the president of the town council without authority. Whether the resolutions required the approval of the chief burgess depended upon whether they were legislative or ministerial. If legislative, approval was essential to their validity. If ministerial, it was not. That they were of a legislative character is clear. They did not direct the doing of something which had been provided for by prior municipal legislation, but, on the contrary, each was an independent attempt at original municipal action. No one of them directed the performance of an executory contract previously authorized by ordinance or resolution, but each was a ways and means act, passed for the purpose of authorizing the borough officers to make a contract with the Cumberland Valley Bank, and therefore required the approval of the chief burgess before it could confer authority upon the president of the council to create a municipal liability to the bank. Jones V. Schuylkill Light, Heat & Power Co., 202 Pa. 164, 51 Atl. 762. Without such approval

out authority to execute any kind of obligation in the name of the borough, and appellant's contention that the judgment entered on the note given by him is void for want of authority to confess it must therefore prevail. But, while we are compelled to so hold, the borough will gain nothing by our reversal of the court below. Though the bank cannot recover on the judgment note given to it, because the attempt to do so is an attempt to enforce an express contract which no one had been properly authorized to execute on behalf of the borough, there is an implied obligation resting upon the municipality to pay back what was lent to it in good faith. The council concededly could have authorized the borrowing of the money and the execution of an obligation to repay it to the bank, and, the borough having received, at its special instance and request, $4,500 from the appellee for its municipal needs, its implied legal obligation is to pay this honest debt. In an action against it for money had and received it will be the duty of the court, under the facts as developed in this proceeding, to direct a recovery. Rainsburg Borough v. Fyan, 127 Pa. 74, 17 Atl. 678, 4 L. R. A. 336. Municipal repudiation of honest indebtedness which the municipality intended to contract and could have lawfully contracted is no more to be tolerated than individual repudiation of honest indebtedness merely because it was not incurred in pursuance of a duly executed express contract, unless the municipal charter or the statutes prohibit the municipality from incurring any liability by implication.

As to the second reason given by the borough for asking that the judgment be declared void, it is a sufficient answer to say that the act of 1860 is a penal one and must be strictly construed. Trainer v. Wolfe, 140 Pa. 279, 21 Atl. 391. It prevents a member of council from profiting by any contract "for the sale or furnishing of any supplies or materials" to his municipality. Money is not within its letter, and certainly not within its spirit. For the use of money a rate of interest is fixed by statute beyond which no lender can profit. In asking the court below to decide that a loan from a bank to a munici pality is void if a member of the banking association making it happens to be a member of the town council authorizing it, the appellant was simply consistent in its narrow, technical, and unconscionable attitude towards the honest claim of the appellee. After the bank had lent the money to the borough in good faith, it was none of its concern how it was spent. A sample of the objections to paying the loan because the borough had illegally expended some of the money is the hiring of teams from two of the members of the town council by the man who was making repairs on the streets. To discuss these objections would be to unduly dignify them.