Appeal from order of Court of Common Pleas of Philadelphia County, Nov. T., 1967, No. 53, in case of American Seating Company v. City of Philadelphia.
Richard K. Masterson, with him Waters, Fleer, Cooper & Gallager, for appellant.
Thomas A. Matthews, Assistant City Solicitor, with him Karl I. Schofield, Deputy City Solicitor, Matthew W. Bullock, Jr., Second Deputy City Solicitor, and Edward G. Bauer, Jr., City Solicitor, for appellee.
Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Eagen. Mr. Chief Justice Bell took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Cohen.
The American Seating Company (hereinafter American) filed a mechanics' lien claim against the landlord interest of the City of Philadelphia in the Spectrum Sports Arena located in Philadelphia. The Common Pleas Court of Philadelphia sustained the City's preliminary objections to the lien claim and entered an order dismissing the lien. From that order, this appeal was taken.
On May 26, 1966, one Jerry Wolman (hereinafter Wolman) and the City of Philadelphia (hereinafter City) entered into a Construction and Lease Agreement which provided that Wolman as the tenant was to construct an arena for ice hockey and other events, Wolman paying the entire cost of construction. The agreement provided that Wolman would remain in possession as tenant for a term of 50 years with an option to renew the lease for an additional term of 50 years. Title to the land on which the arena was to be built and the building itself was to remain with the City.
Wolman entered into an agreement with American under which American undertook to install substantially all of the seating in the arena. After American performed its obligations under the agreement, Wolman and Spectrum Arena, Inc.*fn1 (hereinafter Spectrum) defaulted under their agreement by failing to pay American $170,756.17, the balance owed to American under the contract. American then filed the mechanics' lien claim in that amount against the leasehold
interest of Spectrum and/or Wolman and the landlord interest of the City. The validity of the latter claim is the subject of this appeal.
American argues that its lien claim is valid because the materials and labor it supplied were not provided for a "purely public purpose." This argument responds to § 303(b) of the Act of August 24, 1963, P. L. 1175, 49 P.S. § 1303(b), which provides as follows: "(b) Public Purpose. No lien shall be allowed for labor or materials furnished for a purely public purpose."
According to American, Wolman's (and Spectrum's) right under the agreement with the City to control and exclusively to manage the Spectrum; their right to be selective in scheduling events, to the extent that the public has no choice in the matter; and their involvement in the Spectrum for profit, -- all indicate a vital and vibrant private interest in the Spectrum, and preclude any work in the Spectrum's construction from being purely public in purpose.
In support of thier claim, American relies upon Henry Taylor Lumber Company v. Carnegie Institute, 225 Pa. 486, 74 A. 357 (1909). In that case, the City of Pittsburgh owned land which it set apart for the erection of a technological school. The school was to be constructed by a private board of trustees, which was to hold title to the building, but not to the land upon which it was built. Title to the land was to remain with the City of Pittsburgh pursuant to the authorizing statute. The Board entered into an agreement with a contractor for the construction of the building. Upon the contractor's default in its obligations to a subcontractor, the subcontractor filed a lien claim against the board of trustees and the City of Pittsburgh. The lower court rejected the Board's argument that the subcontractor's work was done for
a purely public purpose" and was therefore exempt from a mechanics' lien claim under the second section of the Act of June 4, 1901, P. L. 431. We accepted the lower court's judgment on that matter, and said in dictum at page 489: "While the Margaret Morrison Carnegie Technical School is, to some extent, a public institution, in that students are educated upon payment of a nominal tuition fee, yet, in our opinion, its purposes cannot be said to be 'purely public'. The funds for its erection and maintenance were contributed by a private citizen, neither the Commonwealth, the City, nor any public agency thereunder furnishing any of the funds necessary therefor, and instead of the school being managed or directed by the public through public officials, it is under the charge of a board of trustees, specially created, with exclusive authority to prescribe the qualifications for admission of pupils, the course and terms of study, and make and enforce such rules and regulations for the management of the school as they may deem proper. Under these circumstances, it seems to us, the public enjoys the benefits of the school, not by right, as it should if the purpose was public, but by permission only."
Thus it appears that § 303(b) of the Act of 1963 (supra) does not preclude a viable mechanics' lien here. But even though the Act permits the lien, still we must inquire and decide whether, apart from the Act, the case law of Pennsylvania precludes mechanics' lien claims against municipalities. For as the lower court indicated, "the Act contains no provision allowing or ...