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FIDELITY BANK v. PENNSYLVANIA TURNPIKE COMMISSION (05/05/82)

decided: May 5, 1982.

THE FIDELITY BANK, AS TRUSTEE UNDER INDENTURE DATED SEPTEMBER 1, 1952
v.
PENNSYLVANIA TURNPIKE COMMISSION, ET AL., APPELLANTS



No. 81-2-303, Appeal from the Orders of the Commonwealth Court of Pennsylvania, entered December 14, 1981 and December 15, 1981 at No. 1774 C.D. 1981.

COUNSEL

William S. Rawls, Mollie A. McCurdy, Deputy Attys. Gen., Harrisburg, Louis R. Martin, Harrisburg, for Pa. Turnpike Com'n.

Carleton O. Strouss, Ward T. Williams, Harrisburg, for Dept. of Transp.

Neil W. Burd, Philadelphia, for Peter J. Camiel.

L. E. Myers, Palmyra, for Hon. Roy Bollinger.

Jay H. Calvert, Jr., Philadelphia, for Fidelity Bank.

Edwin P. Rome, Philadelphia, for Jack I. Greenblat.

O'Brien, C.j., Roberts, Nix, Larsen, Flaherty, McDermott and Hutchinson, JJ. Nix and McDermott, JJ., file dissenting opinions.

Author: Roberts

[ 498 Pa. Page 82]

OPINION OF THE COURT

This is an appeal from an order of the Commonwealth Court, dated December 14, 1981, affirming its order of November 13, 1981. That order dismissed as moot a petition for declaratory judgment filed by the Fidelity Bank ("Fidelity") in its capacity as trustee of certain bonds issued by the Pennsylvania Turnpike Commission ("Commission"), seeking

[ 498 Pa. Page 83]

    a declaration that the Commission may lawfully conduct business with fewer than three commissioners. The order also mandated the reinstatement to the Commission of Peter J. Camiel, who had been suspended from the Commission on May 5, 1980, by order of the Governor. For the reasons set forth below, we vacate the order of the Commonwealth Court, both as to its direction that Mr. Camiel be reinstated to the Commission and as to its dismissal of the declaratory judgment action as moot.

I

The Pennsylvania Turnpike Commission was created by the Pennsylvania Legislature through the Act of May 21, 1937, P.L. 774, No. 211, 36 P.S. § 652d, as amended ("the Turnpike Act"), to construct, operate and maintain the Pennsylvania Turnpike system. The 1937 Act and the subsequent enabling acts provide that the Commission is to consist of five members: the Secretary of Transportation, serving ex officio, and four members appointed by the Governor with the advice and consent of two thirds of the Senate. Section 4 of the 1937 Act, 36 P.S. § 652d, further provides:

"Three members of the commission shall constitute a quorum who, for all purposes, must act unanimously. No vacancy in the commission shall impair the right of a quorum of the commissioners to exercise all the rights and perform all the duties of the commission."

Over the years, pursuant to the power granted by section 8 of the Turnpike Act, 36 P.S. § 652h, the Commission has raised funds for the construction of the Turnpike through the issuance of Turnpike Revenue Bonds. Of these issues, bonds in the principal amount of $95,936,000 are presently outstanding. The bonds are secured by a Trust Indenture, dated September 1, 1952, under which the Fidelity Bank acts as trustee for the bondholders. Under the terms of the Indenture, the Commission is required to act from time to time with respect to such functions as the payment of invoices, maintenance of tolls, collection of revenues, awarding

[ 498 Pa. Page 84]

    of construction contracts, obtaining and maintaining insurance policies, and the like. Under section 802(d) of the Indenture, if "the Commission shall for any reason be rendered incapable of fulfilling its obligations hereunder," there exists an "event of default." Section 803 of the Indenture provides that, if an event of default occurs, the trustee "may, and upon the written request of holders of not less than twenty per centum (20%) in principal amount of the bonds then outstanding shall, declare the principal of all bonds then outstanding . . . to be due and payable immediately . . . ." Under section 804 of the Indenture, the trustee may also proceed to protect and enforce its rights and the rights of bondholders through actions or proceedings at law or in equity.

On July 1, 1981, Commissioner Ray M. Bollinger submitted his resignation from the Commission, effective July 31, 1981. At that time, the Commission consisted of three active members: Chairman Jack I. Greenblat, Secretary of Transportation Thomas D. Larson, and Commissioner Bollinger. A fourth member of the Commission, Peter J. Camiel, had been suspended from the Commission by the Governor on May 1, 1980, as a result of Camiel's indictment on criminal charges brought by the United States Attorney for the Eastern District of Pennsylvania. Because it appeared that Commissioner Bollinger's resignation would reduce the voting membership on the Commission to less than the statutory quorum of three members, Fidelity, in accordance with its responsibilities under the Indenture, filed an action for declaratory judgment in the Commonwealth Court on July 20, 1981, together with a motion for an expedited hearing. Named as defendants were the Turnpike Commission and all of its individual members, including Peter J. Camiel. Fidelity asked that the court declare the Commission to be capable of taking valid and legally binding action to operate and maintain the Turnpike upon the unanimous vote of the two remaining voting members.

President Judge Crumlish scheduled a hearing for July 24, 1981. On that date, Commissioner Bollinger, with the approval

[ 498 Pa. Page 85]

    of the Governor, withdrew his resignation "until such time as the Legislature returns for the Fall session and takes the necessary action to fill the vacancies on the Commission." At the request of Fidelity, the scheduled hearing was continued indefinitely.

All of the parties named as defendants filed answers. Commissioners Greenblat and Bollinger and the Commission, through its acting chief counsel ("Commission counsel"), joined in Fidelity's request for declaratory judgment. Commissioner Larson, believing that default was not imminent, opposed the granting of a declaratory judgment but requested the court to retain jurisdiction over the action "until such time as a default is clearly anticipated." Mr. Camiel filed an answer alleging that his suspension from the Commission by the Governor was a nullity and asking, by way of new matter, that the court declare it as such. In addition to these answers, the Attorney General, acting as the representative of the Turnpike Commission pursuant to the provisions of the Commonwealth Attorneys Act, Act of October 15, 1980, P.L. 950, 71 P.S. §§ 732-101 et seq., filed a motion to dismiss Fidelity's action as moot, contending that the withdrawal of Commissioner Bollinger's resignation extinguished the cause of action.

Chairman Greenblat filed an answer opposing the motion as well as new matter challenging the authority of the Attorney General to represent the Commission and alleging the unconstitutionality of the Commonwealth Attorneys Act, both on its face and in its application to the Commission. Commission counsel filed a petition to intervene on behalf of the Turnpike Commission, joining in Chairman Greenblat's answer and constitutional challenge.*fn1 Fidelity also opposed the motion to dismiss, arguing that Commissioner Bollinger's

[ 498 Pa. Page 86]

    withdrawal of his resignation was only temporary and thus did not render the action moot. Mr. Camiel filed an answer contending that, whatever the status of Commissioner Bollinger, the question of the validity of Camiel's suspension should be decided. By way of new matter, Mr. Camiel stated that on August 4, 1981, a judgment of acquittal had been entered on the criminal charges that formed the basis of his suspension. Camiel asked that the Court declare his entitlement to reinstatement to the Commission "with retroactive pay and other emoluments of office from May 21, 1980," the date of his suspension.*fn2

The Attorney General filed an answer opposing the granting of Camiel's requested relief on the grounds that the Governor, an allegedly indispensable party, was not a party to the proceedings and that the judgment of acquittal entered by the federal district court after a jury verdict of guilty was not final. The Attorney General also filed an answer in opposition to Commission counsel's petition to intervene, alleging that because a quorum of the Commission had not unanimously approved intervention, Commission counsel was without authority to proceed.

Oral argument on all of the issues raised in the various petitions, motions, answers, and new matters was held on September 25, 1981, before President Judge Crumlish. In an opinion and order filed on November 13, 1981, Judge Crumlish held that Fidelity's action for declaratory ...


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