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CITY PITTSBURGH v. PENNSYLVANIA DEPARTMENT TRANSPORTATION (07/03/80)

decided: July 3, 1980.

CITY OF PITTSBURGH, APPELLEE,
v.
PENNSYLVANIA DEPARTMENT OF TRANSPORTATION, WILLIAM SHERLOCK, AS SECRETARY OF THE DEPARTMENT OF TRANSPORTATION, GRACE M. SLOAN, AS TREASURER OF THE COMMONWEALTH OF PENNSYLVANIA. APPEAL OF PENNSYLVANIA PUBLIC UTILITY COMMISSION. CITY OF PITTSBURGH, APPELLANT, V. PENNSYLVANIA DEPARTMENT OF TRANSPORTATION, WILLIAM SHERLOCK, AS SECRETARY OF THE DEPARTMENT OF TRANSPORTATION, GRACE M. SLOAN, AS TREASURER OF THE COMMONWEALTH OF PENNSYLVANIA. PENNSYLVANIA PUBLIC UTILITY COMMISSION, APPELLEE



No. 20 May Term 1979, Appeal from the Order of the Commonwealth Court at 1890 C.D. 1976; No. 23 May Term 1979 Appeal from the Order of the Commonwealth Court at 1890 C.D. 1976

Eagen, C. J., and O'Brien, Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Roberts, J., filed a dissenting opinion. Nix, J., filed a dissenting opinion.

Author: Eagen

[ 490 Pa. Page 266]

OPINION

On August 17, 1972, the Pennsylvania Public Utility Commission (PUC) ordered the City of Pittsburgh (City) to begin immediate demolition and reconstruction of portions of the superstructure of the Baum Boulevard Bridge at the City's expense pending further order of the PUC. By order of January 15, 1974, the PUC allocated the expenses of the project as follows:*fn1 fifty percent (50%) to be paid by the Pennsylvania Department of Transportation (PennDOT), forty percent (40%) to be paid by the City, and ten percent (10%) to be paid by Allegheny County. Payments to the City were to be made when and as certified by the PUC. Certification occurred on October 30, 1974, and costs totaling $667,139.00 were allocated to PennDOT.

[ 490 Pa. Page 267]

PennDOT did not appeal the certification of costs. However, on February 14, 1975, PennDOT petitioned the PUC to open the record challenging certain items billed by the City, namely costs incurred before August 17, 1972 and engineering and inspection costs.*fn2 After a hearing on May 8, 1975, the PUC clarified its order of January 15, 1974 and issued a modified certification on July 21, 1976. This time costs of $655,731.00 were allocated to PennDOT. This sum reflected a reduction equal to sums expended by the City before August 17, 1972. The original order was amended to include specifically the challenged costs of engineering and inspection.

After its repeated requests for payment by PennDOT failed, on October 27, 1976, the City filed a petition for review in the nature of mandamus in the Commonwealth Court. PennDOT filed preliminary objections to the effect that the Court could not order payment of funds which had not been appropriated by the legislature. Later, PennDOT withdrew the preliminary objections and paid the City the sum of $655,731.00, but refused to pay interest on that sum. The City moved for judgment on the pleadings and requested an order directing PennDOT to pay interest at the statutory rate from the date of initial certification. The Commonwealth Court awarded interest dating back to July 21, 1976, the date on which the cost certification was modified. Both parties appeal from that order; PennDOT claims no interest is due; and, the City claims interest should be computed from the date of the initial certification.

PennDOT's challenge to the order of the Commonwealth Court awarding interest to the City is based on "the wellsettled rule that a sovereign state is not liable for interest in any case except where, expressly or by reasonable construction of a contract or statute, it has placed itself in a position of liability." Purdy Estate, 447 Pa. 439, 442, 291 A.2d 93,

[ 490 Pa. Page 268]

(1972) (citations omitted). The Mandamus Act of 1893,*fn3 the basis for an interest award in this case, does not specifically, nor by necessary implication, provide for awards of interest against the Commonwealth.*fn4 See Allegheny County Police Pension Fund v. Casey, 476 Pa. 261, 382 A.2d 461 (1977) (opinion in support of reversal, Roberts, J.). The rationale of the rule that the Commonwealth is not ordinarily liable for interest was enunciated by this Court in Philadelphia v. Commonwealth, 276 Pa. 12, 119 A. 723 (1923):*fn5

"The theory on which interest is allowed, except in cases of contract to pay interest, is that it is damages for delay or default in payment by the debtor, measured by a rate per cent. The State is not liable to pay interest on its debts unless bound by statute or by contract of its executive officers. The government is presumed to be always ready to pay, and it would be against public policy to declare it otherwise: (citations omitted)."

Id., 276 Pa. at 14, 119 A. at 723. The Court further noted there is "no law or section of the Constitution that forbids allowing interest." Id., 276 Pa. at 15, 119 A. at 724.

This rule is closely akin to the doctrine of sovereign immunity, a doctrine abrogated by a majority of this Court as "unfair and unsuited to the times" in Mayle v. Pennsylvania Department of Highways, 479 Pa. 384, 386, 388 A.2d 709, 710, rehearing denied, 479 Pa. 411, 390 A.2d 181 (1978).

[ 490 Pa. Page 269]

Moreover, the very history of this case belies the presumption upon which the rule relies because here the Commonwealth, through PennDOT, clearly has not always been ready to pay its obligation even though for the most part it acknowledged it, infra. We believe the Commonwealth should be subject, under these circumstances, to the same rule as any other party before a court. Although an action in mandamus lies on the law side of the court, equitable principles guide the issuance of the writ and any grant of incidental relief. See Dombrowski v. City of Philadelphia, 431 Pa. 199, 245 A.2d 238 (1968); Taggart v. Board of Directors of Cannon-McMillan Joint School System, 409 Pa. 33, 185 A.2d 332 (1962). Thus, the decision whether to allow interest in a mandamus action under the circumstances was within the discretion of the trial ...


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