The opinion of the court was delivered by: Judge Simpson
BEFORE: HONORABLE ROCHELLE S. FRIEDMAN, Judge,*fn1 HONORABLE ROBERT SIMPSON, Judge, HONORABLE JOHNNY J. BUTLER, Judge.
The Ridgebury Township Auditors (Auditors) seek review of an order of the Court of Common Pleas of Bradford County (trial court) that set aside the Auditors' surcharge of the Township Supervisors (Supervisors), arising from the purchase of a Caterpillar wheel loader. In a bifurcated trial, the sole issue before the trial court was whether Ridgebury Township (Township) suffered a loss as a result of the Supervisors' actions. The trial court concluded the Township did not suffer a loss and dismissed the surcharge. Upon review, we affirm.
The Supervisors sought to purchase a wheel loader for the Township. In October 2004, they considered the purchase of a Volvo wheel loader. The dealer quoted a price of $98,580.00. The Supervisors subsequently authorized the Township secretary to apply for a loan, to use money from the Township's equipment fund, and to take the balance from a certificate of deposit. Several months later, when delivery had not been made, the Supervisors rescinded the contract for the Volvo wheel loader and instead ordered a Caterpillar wheel loader for $99,838.00.
The Auditors found the Supervisors unintentionally failed to follow the statutorily required public bidding process in purchasing the Caterpillar wheel loader, and the Supervisors improperly used funds from the Township's liquid fuel fund. They concluded these irregularities caused a loss to the Township under Section 907(a) of the Second Class Township Code (Code),*fn2 53 P.S. §65907(a). The Auditors calculated a loss of $1,745.91, the sum of 1) the difference between the costs of the two wheel loaders ($1,248.00), and 2) the amount of forgone interest, had the funds remained in the liquid fuel fund ($418.91). The Auditors then filed notices of surcharge against the Supervisors, who appealed the surcharge to the trial court.
The esteemed trial court dismissed the surcharge. The trial court first rejected the Auditors' contention that the Township lost $418.91 in forgone interest. Uncontroverted evidence showed the Township earned a greater amount of interest with the money in the general fund than would have accrued if funds remained in the liquid fuel fund.
The trial court also analyzed the Auditors' reliance on In re Lilly, 341 Pa. 171, 19 A.2d 92 (1941), which interpreted a prior version of the statutory language dealing with surcharge in the absence of intent to violate the law. The case seemed to agree with the Auditors' position that any expenditure exceeding the amount appropriated must be regarded as a financial loss, even if the township received a benefit resulting in no actual pecuniary loss.
After Lilly, however, the General Assembly amended the term "financial loss" to "loss." Thus, the trial court presumed the General Assembly meant the amendment of the language concerning auditors' surcharges to abrogate the holding of Lilly. The trial court interpreted "loss" according to its common and approved usage. Using a dictionary definition, the trial court construed "loss" as the amount the cost of something exceeds its selling price. Based on this definition, and on the credited testimony that the Caterpillar wheel loader was more desirable than the Volvo model, the trial court concluded the Supervisors' increased expenditure was justified and did not constitute a loss to the Township.
Finally, the trial court recommended this Court affirm the decision and end a wasteful political feud between the Auditors and the Supervisors. The Auditors' appeal of the trial court's decision is now before us for disposition.
On appeal,*fn3 the Auditors argue the trial court erred in dismissing the surcharges where the preponderance of the evidence supports those surcharges. In addition, the Auditors assert the trial court erred in bifurcating the trial and misapplied the burden of proof by directing the Auditors to prove the Township's loss rather than considering the Auditors' report as prima facie correct. Finally, the Auditors contend the trial court's decision conflicts with public bidding requirements and public policy.
The relevant Code section reads:
The board of auditors shall surcharge any elected or appointed officer for the amount of any loss to the township caused in whole or in part by the officer's act or omission in violation of law or beyond the scope of the officer's authority. If the auditors find an absence of intent to violate the law or exceed the scope of authority and find the result of the officer's act could have been achieved by legal means and authorized procedures, the surcharge imposed shall be limited to the difference between the costs actually incurred by the township and the costs that would have been incurred had legal means and authorized procedures been employed. Provisions of this section which limit ...