Appeal, No. 232, March T., 1957, from decree of Court of Common Pleas of Westmoreland County, July T., 1956, No. 67, in case of Joseph E. Burke V. The North Huntingdon Township Municipal Authority et al. Decree affirmed.
Christ. C. Walthour, Jr., with him Fred D. Trescher, Frank W. Ittel, Kunkle & Trescher and Reed, Smith, Shaw & McClay, for appellant.
Robert W. Smith, Jr. and Joseph M. Loughran, with them Smith, Best and Horn, for appellees.
Before Jones, C. J., Bell, Chidsey, Arnold, Jones and Cohen, JJ.
OPINION BY MR. JUSTICE BENJAMIN R. JONES
Joseph E. Burke and the North Huntingdon Township Municipal Authority (herein called Township Authority),*fn1 on June 3, 1954, entered into a written contract. The Township Authority, intending to enlarge its water works by constructing additional water lines, a filtration plant and a dam, selected Burke as its engineer for the project. Under the contract Burke agreed to furnish and perform certain specified professional engineering services in connection with the project for which the Township Authority agreed to pay him for such services "Six (6%) per Cent of the cost of the construction of the entire water system ...." The total estimated cost of such construction was $760,000.
Almost two years later - May 28, 1956 - the Township Authority sold its water works to the Municipal Authority of Westmoreland County (herein called County Authority) under a contract to which North Huntingdon Township (herein called Township) was a signatory. Paragraph XII of this agreement recites: "The seller and the Township will pay out of the monies paid to them jointly ... [iii] the reasonable fees and expenses of consulting engineers employed by the seller in connection with the transactions contemplated hereby and for past services but not to exceed Twenty thousand ($20,000) Dollars."
Sometime prior to May 28, 1956, the County Authority sent to the Township and the Township Authority a "letter of intent".*fn2 This "letter of intent" contained four provisions presently relevanted a reference to Paragraph XII of the proposed agreement dated but not signed on May 24, 1956, a reference to Burke's claim of $34,200,*fn3 an opinion that Burke's claim was excessive and that its payment should be refused, and a statement, purporting to clarify the parties' understanding under Paragraph XII, that the County Authority "will pay any sums or amounts which you [Township and Township Authority] are found to be responsible to pay, including Mr. Burke's fee, attorney fees, and court costs in excess of $20,000" and, in the event of a settlement, will "pay all amounts agreed upon in excess of $20,000.00".
Burke's claim not having been paid, he instituted an assumpsit action, joining as defendants therein the Township, the Township Authority and the County Authority. Three causes of action were stated in the Complaint. The cause of action stated against the Township Authority is based upon the contract of June 3, 1954 between the Township Authority and Burke; the cause of action stated against the Township is based upon two grounds: (a) that the Township became liable to Burke by virtue of the provisions of the "Municipality Authorities Act of 1945", providing for the assumption of an Authority's projects by the municipality which created it and (b) under the terms of the contract of May 28, 1956 between the Township Authority and the County Authority to which the township was a signatory; the cause of action stated against the
County Authority is based upon the terms of the same contract between the Township Authority, the County ...