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COMMONWEALTH PENNSYLVANIA v. FEDERATED SECURITY (02/22/80)

decided: February 22, 1980.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, PETITIONER
v.
FEDERATED SECURITY, INC. AND COMMONWEALTH OF PENNSYLVANIA, BOARD OF CLAIMS, RESPONDENTS



Appeal from the Order of the Board of Claims in case of Federated Security, Inc. v. Commonwealth of Pennsylvania, Department of Public Welfare, Docket No. 469.

COUNSEL

Kellen McClendon, Assistant Attorney General, for petitioner.

Michael D. Foglia, for respondent.

Judges Rogers, Blatt and MacPhail, sitting as a panel of three. Opinion by Judge MacPhail. This decision was reached prior to the death of President Judge Bowman. Judge DiSalle did not participate in the decision in this case.

Author: Macphail

[ 49 Pa. Commw. Page 412]

The Department of Public Welfare (DPW) brings this appeal from an order of the Board of Claims (Board)*fn1 entering judgment in favor of Federated Security, Inc. (Federated) and against DPW in the amount of $47,493 with interest. DPW raises two

[ 49 Pa. Commw. Page 413]

    issues for our consideration: whether the Board lacked jurisdiction over these proceedings because Federated failed to file its claim within six months from the date when the claim accrued as mandated by Section 6 of the Act of May 20, 1937 (Act), P.L. 728, as amended, 72 P.S. § 4651-6, and whether, if the Board did have jurisdiction, its order was not in accordance with law. For the reasons which follow, we hold that Federated's claim was untimely and that the Board was without jurisdiction. Accordingly, we reverse the order of the Board and order that Federated's complaint against DPW be dismissed.

Section 704 of the Administrative Agency Law, 2 Pa. C.S. § 704, requires us to affirm the order of the Board unless we find that the order was in violation of DPW's constitutional rights, was not in accordance with law, was in violation of certain required procedures, or was not supported by substantial evidence. The factual history of this case is crucial to our decision.

The food stamp program is administered within the Commonwealth by DPW. On June 20, 1974, DPW and Federated, a corporation engaged in the business of providing security services relating to the receipt, storage, and delivery of tangible items, entered into a contract which provided that Federated would receive and store food stamps and would distribute them to specified banks. The contract, which was to run from July 1, 1974 until June 30, 1975, was in two parts: Federated was to receive $68,364 for delivering the food stamps and $16,740 for storing them over the twelve month period. Following commencement of the contract, a total of $58,430,000 worth of food stamps was delivered to Federated.

Between July and October of 1974, DPW was advised by Federated that there had occurred unaccounted for shortages of food stamps totaling $47,500.*fn2

[ 49 Pa. Commw. Page 414]

On October 17, 1974, DPW wrote a letter to Federated in which it discussed the shortages, advised Federated of a forthcoming audit of the food stamp inventory, and stated that Federated's outstanding invoices (for the months of September and October) would not be paid until the shortage problem was resolved.*fn3 In response to that letter, Federated orally informed DPW that it would make no more food stamp deliveries to banks until payment for those months was received. On October 30, 1974, DPW wrote to Federated stating that it was terminating the contract because Federated refused to make deliveries and because of the "corporation's poor performance thus far under this contract." Federated refused to relinquish possession of the food stamps it held until it received the payment it argued it was due, i.e. delivery and storage charges for September and October, 1974, and storage charges for all subsequent months. In December, 1974, DPW proposed that Federated reimburse DPW for the missing food stamps and turn over the remaining stamps to DPW. In return, DPW proposed to reimburse Federated for the ...


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