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April 16, 1963


Appeals, Nos. 162 and 168, Jan. T., 1963, from decree of Court of Common Pleas No. 3 (docketed C.P. No. 4) of Philadelphia County, Dec. T., 1962, No. 2500, in case of James H. J. Tate, Thomas McIntosh, George X. Schwartz and City of Philadelphia v. Philadelphia Transportation Company. Decree reversed.


Frederic L. Ballard, Jr., with him Tyson W. Coughlin, Charles I. Thompson, Jr., Peter Platten, and Ballard, Spahr, Andrews & Ingersoll, for appellant.

James L. Stern, Deputy City Solicitor, with him Herbert B. Newberg, Ellis A. Horwitz, James L. J. Pie and Matthew W. Bullock, Jr., Assistant City Solicitors, for appellees.

Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.

Author: Bell

[ 410 Pa. Page 492]

ORDER OF THE COURT, January 31, 1963:

Decree reversed; Opinion to be filed in due course.

Opinion BY MR. CHIEF JUSTICE BELL, April 16, 1963:

This is an appeal from a decree appointing a temporary receiver for the Philadelphia Transportation Company (hereinafter referred to as P.T.C.). P.T.C. is a privately owned utility company which owns and/or operates the transit system of and in the City of Philadelphia, furnishing public transportation therein by street car, bus, subway and elevated railway.*fn1 Some of the facilities of transportation, viz., certain subways and elevated railway lines, are the

[ 410 Pa. Page 493]

    property of the City which leases such facilities to the P.T.C. For the use of these facilities, P.T.C. pays the City a substantial license fee in lieu of a minimum rental, and the City is entitled to a share of P.T.C.'s profits in excess of a specified amount. P.T.C. also pays the City a rental on 270 subway and elevated railway cars. By virtue of certain agreements between the City and P.T.C., the City has an option to purchase from P.T.C. the facilities of the transit system which the City does not already own; and City Council has a right to select several members of the P.T.C.'s Board of Directors, in addition to the Mayor, who is, ex officio, a director of that Company.

On January 15, 1963, the contract between P.T.C. and the Transport Workers Union of America, AFL-CIO, representing employees of the P.T.C., expired. For many days prior to January 15th, the P.T.C. and the Union, with the aid of Federal, State and local mediators, had bargained "collectively" concerning the terms of a new contract, but their efforts were unsuccessful. Because the company and the union had been unable to agree on the terms of a new contract prior to January 15th, the union declared a strike on that day.

It is a matter of widespread common knowledge, of which we take judicial notice, (1) that this strike brought about a complete cessation of all such public transportation in the City and caused great hardship (a) to all those persons who needed transit facilities to reach their place of business or employment and (b) to those persons whose illness necessitated a trip (by public transportation) to a hospital, and (2) that business and travel in the City were substantially paralyzed by the strike and (3) that due to the strike, the financial loss to the P.T.C., to the members of the union, to the City, to business firms and to places of recreation in the City was enormous.

[ 410 Pa. Page 494]

On January 18, 1963, three days after the commencement of the strike, the City, through Mayor Tate and two City selected directors of P.T.C., filed a Complaint in Equity praying for the appointment of a temporary receiver for the P.T.C. and for additional relief. In the Complaint plaintiffs averred, inter alia, several of the above recited facts. They also averred that (a) by its refusal to permit the incorporation of any "no lay-off" clause in any proposed agreement with the union, P.T.C. was not bargaining in good faith; (b) that the continuance of the strike was not only working extreme hardship to all the citizens of Philadelphia, but was also subjecting the City, in its proprietary capacity, to irreparable financial damage and that this was due to the company's failure to properly operate the transit system and to properly maintain the facilities of that system belonging to the City, thereby causing a loss of current rentals, as well as a probable permanent loss of patronage by the P.T.C. and consequent loss of rentals to the City. Complainants also averred that P.T.C.'s conduct of negotiations with the union, its refusal to agree to a "no lay-off" clause, and its insistence on an increase in fares before any agreement could be made with the union constituted "gross mismanagement" and tended to impair its solvency.

The relief prayed for in the Complaint was that the Court grant preliminarily an order restraining P.T.C. from (a) insisting upon the granting of a fare increase by the State Public Utility Commission prior to the execution of a new agreement with the union; (b) failing properly to maintain its transit facilities; (c) committing further waste; (d) refusing to bargain with its employees in good faith. The complainants also requested the Court to appoint a receiver to take possession of all the assets and property of P.T.C. and to operate its transit facilities "until a new labor agreement between P.T.C. and the representations of its employees

[ 410 Pa. Page 495]

    has become effective." General relief was also prayed for.

The Court entered a Rule upon P.T.C., returnable January 22, 1963, to show cause why the relief prayed for should not be granted. Preliminary objections filed by the defendant on January 21st were overruled on January 22nd. On January 24th the P.T.C. filed a responsive answer admitting many factual averments in the complaint but denying all of appellees' averments of law and conclusions, including the right of the City to the relief prayed for. Included in such Answer was New Matter in which P.T.C. averred that it had been engaging in collective bargaining in good faith, and that none of the representatives of the City who were members of P.T.C.'s Board of Directors had suggested the desirability of adopting different policies, and that Mayor Tate had entered into the negotiations contrary to the wishes of defendant and had interfered with and obstructed defendant's ...

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