Municipal Claims Act of May 16, 1923, P.L. 207, § 4. Judgment was entered in favor of Tony DePaul and against the Debtor in the amount of $15,635.37, representing the aggregate sum of the municipal liens assigned to petitioner by the City of Philadelphia.
The present petition was filed in response to the Trustees' refusal to satisfy this outstanding judgment. The petitioner seeks an order compelling the Trustees to pay the judgment. The Trustees are resisting payment pursuant to the authority conferred to them by Paragraph 3(A) of Order No. 1 in these proceedings. That provision authorizes the Trustees, in their discretion, to "pay all or any [assessments], in whole or in part, without limiting the generality thereof, and to adjust or compromise the same."
Obviously, the above-quoted provisions of Order No. 1 vest the Trustees with the discretionary power to refuse to pay municipal assessments and other governmental charges. In fact, the Trustees have deferred payment of all such expenses since August 24, 1970.
The policy considerations which support the provisions of Paragraph 3(A) of Order No. 1 are analogous to those underlying § 77(c)(2) of the Bankruptcy Act (11 U.S.C. § 205(c)(2). Section 77(c)(2) provides that trustees in reorganization are not bound to comply with orders of state regulatory agencies which require the expenditure of the debtor's funds, unless the reorganization court finds that "extraordinary circumstances" warrant compliance with the order. The purpose of § 77(c)(2), and of Paragraph 3(A)(2) of Order No. 1, is to insure that the Debtor's estate is not depleted by forced compliance with governmental maintenance programs, in the absence of a showing that such expenditures are really necessary for the protection of the public safety. In order to continue operating the Penn Central system for the public benefit, especially in light of the Debtor's precarious financial condition, the Trustees must be given broad leeway to avoid capital expenditures which are not absolutely necessary. See Memoranda and Orders Nos. 1649 and 1653.
Here, neither the petition itself nor the evidence introduced in support of the petition justifies the conclusion that the condition of Delaware Avenue prior to repair posed a serious threat to the safety of the public. In fact, the affidavit of Penn Central's senior civil engineer, which is uncontroverted on the record, makes it clear that the Delaware Avenue repairs were nothing more than routine maintenance work on a municipal highway:
"This project involved the reconstruction and repaving of Delaware Avenue between Oregon Avenue and the Walt Whitman Bridge. Curbs and sidewalks were installed along Delaware Avenue abutting property owned or leased by Penn Central Transportation Company. The improvements were made in an area in which there is no pedestrian traffic, and it is my opinion that the Penn Central would not have initiated or undertaken such work in the normal course of business. I am also of the opinion that the project was then and now is in no way of benefit to the estate of the Debtor."