Appeals from the Order of the Court of Common Pleas of Washington County, in the cases of In Re: 1983 Audit Report of Patricia A. Beharry, Controller, No. 19 April 1984; In Re: 1984 Audit Report of Patricia A. Beharry, Controller, No. 19 April 1985, and In Re: 1985 Washington County Annual Financial Report Surcharge, No. 1676 of 1986.
Christine A. Ward, with her, Robert F. Wagner, Dickie, McCamey & Chilcote, P.C., for appellant, Patricia A. Beharry, Controller of Washington County.
Melvin B. Bassi, County Solicitor, with him, Katherine B. Emery, Assistant County Solicitor, for appellants, Washington County Commissioners.
Anthony J. Seneca, Seneca & O'Dell, P.C., for appellee, James A. Fazzoni, Sheriff of Washington County.
President Judge Crumlish, Jr., and Judges Craig, MacPhail, Doyle, Barry, Colins and Palladino. Opinion by Judge Doyle. Concurring and Dissenting Opinion by Judge Colins. Judge Barry joins.
[ 116 Pa. Commw. Page 616]
Before us for our consideration are cross appeals from an order of the Court of Common Pleas of Washington County*fn1 which, upon consideration of post-trial motions reaffirmed its prior order in part and modified it in part. The case began when the commissioners of Washington County (County) and the sheriff were assessed certain surcharges by the County controller. The propriety of those surcharges, which pertained to 1983, 1984 and 1985 Annual Financial Reports of the County, were appealed to the common pleas court which dismissed all but one of the surcharges against the commissioners and dismissed certain, but not all, of the surcharges against the sheriff. Upon consideration of post-trial motions, the court reaffirmed its determination with respect to the commissioners, but further reduced the surcharges against the sheriff. Cross-appeals to this Court ensued.
A multitude of issues is raised for our consideration here. We shall attempt to organize these matters by examining first the controller's appeal from the dismissal of various surcharges against the commissioners, second the controller's appeal of the dismissal of certain surcharges against the sheriff (who did not cross-appeal on the surcharges which were sustained) and third the commissioners' appeal from the imposition of a
[ 116 Pa. Commw. Page 617]
$203,659.90 surcharge against them which surcharge pertained to a contract for certain telephone services and equipment with AT&T Information System (AT&T).
Pretrial Determination on Constitutionality of Bonding Provision
Before reaching the substantive merits generally, however, there is a threshold issue of a procedural nature which confronts us. After the imposition of the various surcharges by the controller, the commissioners and the sheriff appealed. By pretrial order, the lower court ruled that the requirement of posting a bond in double the amount of the surcharges mandated by what was then Section 1731 of The County Code (Code), Act of August 9, 1955, P.L. 323, as amended, 16 P.S. § 1731, violated due process and was, hence, unconstitutional. Section 1731 has since been amended to eliminate the bonding requirement and said amendment is designated by the legislature to be retroactive to January 1, 1978. See Section 1 of the Act of December 17, 1986, P.L. 1683. We are asked to decide whether the trial court properly held the double bonding requirement to be unconstitutional. The commissioners argue that even if the statute were constitutional, the 1986 retroactive amendment has operated to moot the issue. Section 1731 at the time of this litigation provided as follows:
Appeals from [Controller's or Auditor's] Reports
An appeal may be taken from such reports to the court of common pleas, either by the Commonwealth, the county or the officer. Such appeal may also be taken by ten or more taxpayers in behalf of the county, in the manner and subject to the restrictions provided by article twenty-eight of this act.
Such appeal shall be entered by the Commonwealth within four months, and by the county
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and the officer within sixty days after the filing of the report. If the officer is the appellant, he shall enter into a recognizance with two sufficient sureties in double the sum found due by such report, with condition to prosecute the appeal with effect and to pay the costs and such sum of money as shall appear on the final determination of the appeal to be due from him. (Emphasis added.)
Section 1731 was amended as of December 17, 1986. The amendment deleted the sentence emphasized in the above quotation and replaced it with the following language:
Upon appeal to the court of common pleas, the controller or auditors shall be required to establish the validity of the surcharge and shall establish the loss sustained to the county. If the surcharge is upheld on appeal to the court of common pleas, the officer so surcharged shall immediately pay the costs and money due to the county.
Pursuant to Section 2 of the 1986 amendment, the legislature provided "this act shall be retroactive to January 1, 1978."
It is, of course, well settled that there is a presumption against a statute having a retroactive effect and that such construction will not be embraced unless it is clearly and manifestly intended by the legislature. See Section 1926 of the Statutory Construction Act of 1972, 1 Pa. C. S. § 1926. Further, retroactive laws will be supported only when they do not impair contractual or other vested rights but operate merely to vary the remedy or cure defects in proceedings which are otherwise fair. Costa v. Lair, 241 Pa. Superior Ct. 517, 363 A.2d 1313 (1976). In the instant case, the legislature has
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clearly manifested its intent that the 1986 amendment be retroactive. Further, the elimination of the prehearing bonding requirement does not deprive anyone of a vested right; to the contrary, it protects the vested property right of those surcharged. We, thus, view the amendment as one which cured a procedural due process problem and, hence, one which falls within the restrictive category of statutes whose retroactive application is permissible. Having determined that retroactivity operates to bar imposition of the bonding provision as of January 1, 1978, we conclude that the question of whether former Section 1731 was constitutionally infirm is now moot.
The Controller's Authority to Surcharge
Furthermore, before discussing the substance of the various surcharges which were dismissed by the trial court, we must consider the overriding question of whether the controller has the authority to impose a surcharge if she has not first refused to pay the expenditure which is the subject of the surcharge. At issue here is the interrelationship between two provisions of the Code. Section 1730 of the Code, 16 P.S. § 1730, which pertains to the controller's post-audit duty to file reports and her authority to impose surcharges, provides as follows:
(a) The reports of the controller or auditors shall be filed among the records of the court of common pleas of the county.
(b) The amount of any balance or shortage, or of any expenditure of a kind, or made in a manner, prohibited or not authorized by statute, which causes a financial loss to the county shall be a surcharge against any officer against whom such balance or shortage shall appear, or who by
[ 116 Pa. Commw. Page 620]
vote, act or neglect, has permitted or approved such expenditure, but no elected or appointed official of a county shall be surcharged for any act, error or omission in excess of the actual financial loss sustained by the county, and any surcharge shall take into consideration as its basis the results of such act, error or omission and the results had the procedure been strictly according to law. The provisions hereof limiting the amount of any surcharge shall not apply to cases involving fraud or collusion on the part of officers, nor to any penalty enuring to the benefit or payable to the Commonwealth.
The above-quoted language constituted an amendment to Section 1730. This amendment, like the amendment to Section 1731 which we discussed above, was enacted on December 17, 1986, and was also given retroactive effect back to January 1, 1978. The prior version of Section 1730 provided as follows:
The reports of the controller or auditors shall be filed among the records of the court of common pleas of the county, and from the time of such filing shall have the effect of a judgment against the real estate of the officer who shall thereby appear to be indebted either to the Commonwealth or to the county.
Unlike the prior issue, the parties do not dispute, for purposes of this issue, the retroactive effect of the amendment. Thus, our discussion will focus upon Section 1730 as amended in 1986. It should be noted, however, that only with respect to the pre-judgment provision appearing in prior Section 1730, and the constitutional challenge raised to that provision, do the commissioners attack the constitutionality of that provision on the merits. See discussion infra.
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Section 1752 of the Code, 16 P.S. § 1752, which pertains to pre-audit functions of the controller, is the statute whose interrelationship with Section 1730 we must consider. Section 1752 provides as follows:
Claims not approved by controller
If the controller does not approve a claim, bill or demand presented to him, he shall within thirty days forward it to the county commissioners together with his notice that he has refused to approve the same and his reasons therefor. The county commissioners shall consider the claim, bill or demand and, if they consider that it should be paid by the county, they shall so notify the controller. If the controller thereafter continues to refuse his approval no payment shall be made ...