Appeal from the Order of the Commonwealth Court entered January 7, 2009 at No. 1378 CD 2007, reversing the Order of the Court of Common Pleas of Erie County entered June 27, 2007 at No. 58-2007 and remanding.
The opinion of the court was delivered by: Mr. Justice Saylor
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.
ARGUED: September 16, 2009
In this appeal, we consider whether the Donated or Dedicated Property Act applies to the sale of a municipal golf course and park.
In 1926, lands now known as the Erie Golf Course were conveyed to the City of Erie by a private club, on the municipality's payment of a nominal consideration of one dollar and assumption of a $15,000 mortgage. The recorded deed included a restrictive covenant, consistent with an authorizing ordinance, memorializing the City's commitment to preserve the property, indefinitely, as a golf course and/or for park purposes. The deed also formalized the parties' agreement that the restriction was to run with the land.
The City acted consistent with its covenant from 1926 until 2006. Indeed, in 2004, the governing body approved a multi-million dollar bond issue to perform improvements consistent with the original purposes. Shortly after the renovations, however -- upon a change in City administration and in the face of economic challenges -- the municipality permanently closed the golf course. Subsequently, the governing body authorized advertisements for sale of the property.
To support this course of action contrary to its recorded commitment, the City invoked the Donated or Dedicated Property Act.*fn1 In very general terms, and as relevant here, the enactment permits political entities to sell at least certain donated or dedicated property upon orphans' court approval, subject to conditions, where the original purposes are no longer practical and the property has ceased to serve the public interest. See 53 P.S. §3384.
The City filed a petition seeking relief under the DDPA, and the orphans' court approved intervention by Appellants, Lake Region Conservancy and the Committee to Keep Erie Golf Course Open, which opposed a sale or other relief from the City's fiduciary responsibilities relative to the property. At the ensuing hearings, City witnesses testified that the golf course consistently operated at a net loss; losses would continue into the foreseeable future; the municipality had found it necessary to borrow from its general fund to maintain the golf course's operations; and it would likely have to continue to do so in the future to repay the multi-million dollar bond issue. See N.T., Mar. 26, 2007, at 43, 49-52; N.T., Apr. 16, 2007, at 30-33. Ultimately, the orphans' court denied relief on the City's petition, determining that the property must remain in the public trust, and an appeal followed.
In its opinion under Rule of Appellate Procedure 1925(a), the orphans' court examined Section 2 of the Act, focusing, in particular, on the below-emphasized language:
All lands... heretofore... donated to a political subdivision for use as a public facility, or dedicated to the public use or offered for dedication to such use, where no formal record appears as to acceptance by the political division,... shall be deemed to be held by such political subdivision, as trustee, for the benefit of the public with full legal title in the said trustee.
53 P.S. §3382 (emphasis added). According to the court, the italicized term served to limit the application of the entire Act solely to circumstances in which no formal record of acceptance appears. Thus, the court rejected the City's contrary argument that the no-formal-acceptance proviso actually was intended to clarify that the DDPA applies, not only to fully-realized dedications, but also in circumstances where some degree of uncertainty might prevail concerning acceptance by a municipality.*fn2 The orphans' court found support for a restrictive construction of the DDPA's reach in a line of Commonwealth Court decisions. See, e.g., Vutnoski v. Redevelopment Auth. of Scranton, 941 A.2d 54, 58-59 (Pa. Cmwlth. 2006); In re Conveyance of 1.2 Acres of Bangor Mem. Park to Bangor Area Sch. Dist., 130 Pa. Cmwlth. 143, 147-48, 567 A.2d 750, 753 (1989) (adopting, by incorporation, a narrow approach to the Act's scope).
The orphans' court elaborated that, under the common-law public trust doctrine, a political entity is prohibited from undermining the public's right of use of property after its dedication and acceptance. See Bd. of Trs. of Phila. Museums v. Trs. of Univ. of Pa., 251 Pa. 115, 123-24, 96 A. 123, 125 (1915); City of Easton v. Koch, 152 Pa. Super. 327, 339, 31 A.2d 747, 752 (1943). Here, the court reasoned that the Erie Golf Course was formally dedicated and accepted by the City for public enjoyment, evidenced by: the express language of the recorded deed; the ordinance accepting the dedication; the City's continuous and exclusive use of the property as a golf course for over eighty years; its contribution of funds toward the maintenance and improvement of the property consistent with the designated purposes; and the public's use of the property as such since 1926. Thus, the court determined that the public trust doctrine, and not the Act, controlled. Because the City held the property as a fiduciary for the benefit of the public, the court concluded that the municipality was prohibited from selling, conveying, or otherwise abandoning the specified uses, consistent with its recorded covenant.
The orphans' court also observed that -- even assuming, arguendo, that the Act applied -- the City's only support for its argument of impracticability rested on the debt service burden. The court was not convinced, however, by the City's financial evidence that the property no longer served the public interest, particularly as this evidence was substantially undermined upon adversarial testing. Likewise, the court indicated that the City failed to establish impracticability of the public-park use. Furthermore, the court found that the recent renovations substantially enhanced the viability of the existing uses.*fn3
In light of a conflict in prior panel decisions,*fn4 the Commonwealth Court considered the City's appeal en banc. See In re Erie Golf Course, 963 A.2d 605, 606 (Pa. Cmwlth. 2009). In a divided opinion, the intermediate appellate court adopted the municipality's more expansive construction of the Act's scope and, accordingly, reversed the orphans' court's order. See id. at 612. In supportive reasoning, the majority implicitly deemed the statute ambiguous and invoked several tools of statutory construction. Primarily, the majority discerned the meaning of the controverted no-formal-acceptance proviso from the context surrounding its use. See id. (citing Phila. Hous. Auth. v. PLRB, 508 Pa. 576, 586, 499 A.2d 294, 299 (1985)). In this regard, the majority gleaned a legislative intent to address fully-realized dedications from the language of Section 2 following the no-formal-acceptance term,*fn5 as well as in other passages of the Act.*fn6 In particular, the majority referenced Section 4, which authorizes disposition of certain public trust property, in defined circumstances, as follows:
When, in the opinion of the political subdivision which is the trustee, the continuation of the original use of the particular property held in trust as a public facility is no longer practicable or possible and has ceased to serve the public interest, or where the political subdivision, as trustee for the benefit of the public, is in doubt as to the effectiveness or the validity of an apparent dedication because of the lack of a record of the acceptance of the dedicated land..., the trustee may apply to the orphans' court of the county in which it is located for appropriate relief. The court may permit the trustee to--
(1) Substitute other lands... in exchange for the trust property in order to carry out the trust purposes.
(2) If other property is not available, sell the property and apply the proceeds to carry ...