decided: July 27, 1978.
COMMONWEALTH OF PENNSYLVANIA EX REL. PENNSYLVANIA SECURITIES COMMISSION, APPELLANT
ALLAMANDA INVESTMENT COMPANY ET AL., APPELLEES
Appeal from the Order of the Court of Common Pleas of Allegheny County in case of The Commonwealth of Pennsylvania ex rel. Pennsylvania Securities Commission v. Allamanda Investment Company, Royal Poinciana Investment Company, R. William Ozimec, individually, and R. William Ozimec, as General Partner of Allamanda Investment Company and Royal Poinciana Investment Company, No. G.D. 76-26280.
Robert V. Campedel, Assistant Attorney General, with him Robert P. Kane, Attorney General, for appellants.
Howard T. Gilfillan, with him George Shorall, for appellee.
Judges Mencer, Rogers and DiSalle, sitting as a panel of three. Opinion by Judge Mencer.
[ 37 Pa. Commw. Page 34]
The Pennsylvania Securities Commission (Commission) began an investigation of Royal Poinciana Investment Company (Royal Poinciana), Allamanda Investment Company (Allamanda), and Rudy W. Ozimec, after receiving complaints from various investors in Royal Poinciana and Allamanda. The Commission's investigation revealed that Rudy W. Ozimec was the promoter, general partner, and salesman of Royal Poinciana and Allamanda. Ozimec, through various representations which the Commission found to be misleading or false, solicited investments in the amount of $124,415 in Royal Poinciana from seventeen persons and in the amount of $162,000 in Allamanda from twelve persons. The investments were in the form of limited partnerships which are defined as securities in Section 102(t) of the Pennsylvania Securities Act of 1972 (Act),*fn1 70 P.S. § 1-102(t). The limited partnership interests were not registered as securities as required by Section 201 of the Act, 70 P.S. § 1-201.
The goal and purpose of Royal Poinciana and Allamanda, as represented by Ozimec, was the ownership and development of land in Florida. After many unkept promises by Ozimec, some investors filed criminal complaints in Westmoreland County charging Ozimec with theft of funds, but he could not be found in Pennsylvania. Thereupon, the Commission filed a complaint in equity, pursuant to Section 509(a)
[ 37 Pa. Commw. Page 35]
of the Act, 70 P.S. § 1-509(a), seeking equitable relief for the investors and the appointment of a receiver. On November 30, 1976, the Court of Common Pleas of Allegheny County entered an order appointing George Shorall, Esquire, as receiver for Royal Poinciana and Allamanda.
The receiver proceeded to collect the assets of Royal Poinciana and Allamanda and determined that the total assets consisted of land in Florida and $1199 in cash. The receiver decided that it would be desirable for him to travel to Florida and inspect the property of the receiverships.
The receiver filed for a rule to show cause why the Commonwealth of Pennsylvania, Pennsylvania Securities Commission, should not advance sufficient funds to the receiver to cover his travel expenses to Florida and to pay the receiver for the costs he had advanced and for his services. On May 18, 1977, the Court of Common Pleas of Allegheny County ordered the Commission to pay George Shorall, receiver, the sum of $1,000 for reimbursement of his expenses and the sum of $5,000 in partial payment for his services, with both sums to be credited to and returned to the Commission from any sums realized from the assets of the debtor. The Commission attempted to file exceptions to this order, but it was refused permission to file exceptions by an order dated June 3, 1977. This appeal followed and we reverse.
The courts are without authority to direct payments of demands upon the Commonwealth of Pennsylvania, Pennsylvania Securities Commission, except when empowered so to do by appropriate legislation. No authority has been found and none cited by the receiver or court below, warranting the order made by the court, and we are therefore compelled to conclude that the order in question here was made without authority and is void.
[ 37 Pa. Commw. Page 36]
In Atlantic Trust Co. v. Chapman, 208 U.S. 360, 364, 370, 375 (1908), we find the following pertinent pronouncement:*fn2
The principal question in this case -- now before us upon writ of certiorari for the review
[ 37 Pa. Commw. Page 37]
of a final order of the circuit court of appeals for the ninth circuit -- is stated by counsel to be this: Is a complainant who has, in good faith, prosecuted a suit upon a good cause of action, and upon whose application the court has properly appointed a receiver, and who obtains a decree fully establishing his rights, nevertheless personally responsible for a deficiency caused by the failure of the property which is the subject of the suit to bring enough to cover the allowances made by the court to the receiver and his counsel, and the expenses which the receiver, without special request of the complainant in any instance, had incurred?
[ 37 Pa. Commw. Page 38]
They have no authority over him and cannot control his acts.
In earlier days it was deemed an expected and proud service of the bar to accept assignments from the court even where it was evident from the outset that such assignments would be without compensation. Commonwealth v. Thompson, 367 Pa. 102, 79 A.2d 401 (1951). Here, a small fund in the receivership account has not been utilized and there exists the reasonable prospect that the land in Florida, which the receiver wishes to personally inspect, will be sold and thus produce a fund available to the receiver for his expenses and compensation.
Therefore, we conclude that, since the receiver can point to no Act of Assembly or other authority giving the Court power to allow such payments, none can be made.
Now, this 27th day of July, 1978, the order of the Court of Common Pleas of Allegheny County, under date of May 18, 1977, ordering the Commonwealth of Pennsylvania ex rel. Pennsylvania Securities Commission to pay George Shorall, receiver, the sum of $1,000 for reimbursement of his expenses and the sum of $5,000 in partial payment for his services is hereby reversed.