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decided: December 21, 1979.



Thomas D. Caldwell, Jr., Harrisburg, for appellant.

J. Leonard Langan, Harrisburg, for appellees.

Eagen, C. J., and O'Brien, Roberts, Nix, Manderino and Larsen,*fn* JJ. Nix, J., concurs in the result. Roberts, J., filed a dissenting opinion. Manderino, J., did not participate in the decision of this case.

Author: Larsen

[ 487 Pa. Page 487]


In the summer of 1972, the appellant, Central Storage and Transfer Co., and officers of the Pennsylvania Liquor Control Board (hereinafter "the Board") began negotiations for the leasing of space in a warehouse appellant had under construction. The officers of the Board informed appellant that the Board would lease a substantial portion of the warehouse if it were constructed to meet the Board's needs. Shortly thereafter, on September 8, 1972, the appellant granted the Pennsylvania Department of Property and Supplies (now the Department of General Services) a ninety-day option to lease warehouse space for the use of the Board. The option incorporated the terms and specifications that the Board's officers had given appellant and, subsequent to its execution, appellant altered its plans and completed construction of the building in conformance with those specifications.

On November 1, 1972, the Board approved the option to lease. The Department of Property and Supplies, however, refused to enter into the lease, and the Board then refused to occupy the premises.*fn1 After unsuccessful efforts to renegotiate

[ 487 Pa. Page 488]

    with the Commonwealth and to lease the premises to another party, appellant filed a claim with the Board of Claims seeking reimbursement from the Liquor Control Board of the monies it had expended in altering the warehouse to suit the Board's needs.

The Auditor General and State Treasurer, sitting as the Board of Claims, "settled" the claim against the Liquor Control Board and awarded appellant damages. Following the denial of a petition for resettlement, the Liquor Control Board filed a petition for review with the Board of Finance and Revenue, which reversed the Board of Claims and "resettled" the claim in favor of the Liquor Control Board. Appellant then filed a petition for review with the Commonwealth Court. After hearing the case de novo, that Court entered an order dismissing appellant's petition, and appellant brought this appeal.

Appellant contends that its right to recovery is clearly set forth in the Restatement (Second) of Contracts § 90,*fn2 and that the Commonwealth Court, therefore, erred in dismissing its petition for review. We disagree; even assuming that appellant has made out a claim under § 90 of the Restatement (Second) of Contracts,*fn3 that theory of recovery

[ 487 Pa. Page 489]

    may not be advanced against the Liquor Control Board under the circumstances of this case.

The doctrine embodied in § 90 of the Restatement (Second) of Contracts, the doctrine of promissory estoppel, is the law of Pennsylvania. Murphy v. Burke, 454 Pa. 391, 311 A.2d 904 (1973). It is also the law of Pennsylvania that the Commonwealth or its subdivisions and instrumentalities cannot be estopped "by the acts of its agents and employees if those acts are outside the agent's powers, in violation of positive law, or acts which require legislative or executive action." Kellams v. Public Sch. Emp. Retirement Bd., 486 Pa. 95, 403 A.2d 1315, 1318 (1979) (Larsen, J., Opinion in Support of Reversal) (citations omitted). As a result, "[p]ersons contracting with a governmental agency must, at their peril, know the extent of the power of its officers making the contract." Commonwealth v. Seagram Distillers Corporation, 379 Pa. 411, 417, 109 A.2d 184, 188 (1954); see also Breinig v. Allegheny County, 332 Pa. 474, 2 A.2d 842 (1938).

In the instant case, the portions of the Liquor Code and Administrative Code set forth in note 1, supra, make it clear that the Liquor Control Board is without authority to enter into the lease of warehouse space. Appellant, however, alleges that the acts and statements of officers of the Liquor Control Board nevertheless led it to believe that the Board could and would enter into the lease. Appellant argues that since it detrimentally relied on these acts and statements, they are actionable under the doctrine of estoppel set forth in § 90 of the Restatement (Second) of Contracts. This argument ignores the fact that the Liquor Control Board, and thus its officers, are by statute without power to enter into such leases and expressly prohibited from doing the same. The alleged acts and statements upon which appellant bases its cause of action cannot, therefore,

[ 487 Pa. Page 490]

    be used to bind the Liquor Control Board, and the Commonwealth Court properly dismissed appellant's petition. See Commonwealth v. Seagram Distillers Corporation, supra; In re Whitford's Liquor License, 166 Pa. Super. 48, 70 A.2d 708 (1950); and Willis v. York County Poor Directors, 284 Pa. 138, 130 A. 401 (1925).

The order of the Commonwealth Court is affirmed.

ROBERTS, Justice, dissenting.

*fn* This case was reassigned to the author on November 14, 1979.

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