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BEAM v. EPHRATA BOROUGH. (03/24/59)

March 24, 1959

BEAM, APPELLANT,
v.
EPHRATA BOROUGH.



Appeal, No. 344, Jan. T., 1958, from order of Court of Common Pleas of Lancaster County, Equity Docket No. 11, page 314, in case of Elmer L. Beam et ux. v. Borough of Ephrata et al. Order modified and affirmed.

COUNSEL

B. M. Zimmerman, with him Brown & Zimmerman, for appellants.

George F. Baer Appel, with him F. Lyman Windolph and Townsend, Elliott & Munson, for appellees.

Before Jones, C.j., Bell, Musmanno, Jones and Cohen, JJ.

Author: Cohen

[ 395 Pa. Page 349]

OPINION BY MR. JUSTICE COHEN

This taxpayers' suit was brought to restrain the Borough of Ephrata and the individual members of the borough council from issuing $350,000 of non-debt revenue bonds, complaining if the bonds were issued a debt would be created in violation of the debt limitation

[ 395 Pa. Page 350]

    provision of the Pennsylvania Constitution.*fn1 The lower court sustained preliminary objections to the complaint in equity from which decree this appeal was taken.

It was stipulated that the gross revenues from the electric system, which was to be improved with the proceeds of the bond issue were sufficient to pay the operating expenses, principal and interest required by the proposed bonds, thereby providing a complete selfsustaining bond issue. It was further stipulated that the borough does not have sufficient councilmanic and electorial borrowing capacity under the constitutional provision to borrow the money necessary to pay for the proposed improvements.*fn2

The Borough of Ephrata passed Ordinance No. 725 which authorized the issuance of bonds pursuant to the borough code permitting non-debt revenue bonds to be issued for capital improvements to certain public service facilities.*fn3 The Municipal Borrowing Act provides

[ 395 Pa. Page 351]

    the method by which these revenue bonds ...


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