Commonwealth Ex Rel. Margiotti v. Cunningham

Despite the provisions of the several Acts of Assembly requiring sheriffs to refund the unexpended balances of moneys deposited with them in their official capacity,¹ and in the face of the unanimous decision of this Court in Trestrail, Admr. v.Johnson, 298 Pa. 388,² the appellants, as executors of the will of the late Sheriff Cunningham, have retained in their possession large sums of money to which their decedent had no right or title at the time of his death. I do not believe that they have a right to attack in this proceeding the constitutionality of the Act of April 8, 1937, P. L. 284, which was intended to correct such a notoriously bad practice. Furthermore, I am firmly convinced that the Act is a valid and constitutional exercise of legislative power.

First, let us examine the anomalous position assumed by the executors. They admit that they have no property rights in the funds which the Act requires them to turn over to the county treasurer, but they contend that the Act will deprive therightful owners of the property without due process of law, and will impair the obligations of their "contracts" with the sheriff and his personal representatives. Nevertheless, should their contention prevail, and if they pursue the custom which the legislature has sought to terminate, they will distribute these moneys to the heirs or legatees of the late sheriff after the statutory period of limitation has barred the claims of the rightful owners. Their solicitude for these owners would seem to be more apparent than real. I am unable to find in their position any such equity as would justify this Court in departing from the familiar and salutary principles of constitutional law that every presumption favors the validity of an Act of Assembly (Speer v. School Directors ofBlairsville, 50 Pa. 150; Sugar Notch Boro., 192 Pa. 349), and that only a person whose constitutional rights are violated can complain: Gottschall v. Campbell, 234 Pa. 347; Mesta MachineCo. v. Dunbar Furnace Co., 250 Pa. 472; Com. v. Dollar SavingsBank, 259 Pa. 138; Turco Paint Varnish Co. v. Kalodner,320 Pa. 421.

Even if those fatal obstacles to the consideration of the constitutional issues raised by the executors could be circumvented, I see no basis for the conclusion reached by the majority on those issues. Their principal objection to the statute is that the owners of these funds will be deprived of their remedy in assumpsit against the sheriff or his representatives, and given, as an inferior substitute, an unenforceable claim against the county treasurer dependent upon "proof of claim to the satisfaction of the county controller." To demonstrate the inferiority of the substituted remedy, the majority first assume that the Act confers upon the controller the broadest discretion to "adjudicate" the merits of a claim, and secondly, that if he arbitrarily and capriciously fails to comply with the statute, no judicial review of his decision will be available to the claimant, because mandamus will not lie to compel the performance of a purely discretionary act. Both assumptions are, in my opinion, clearly fallacious.

The initial fallacy lies in failing to give to the words of the Act their plain meaning. There is no warrant whatever for assuming that the legislature intended that the controller should go behind the records of the sheriff to satisfy himself of the right of a claimant to the unexpended balance of his deposit. It is apparent that the controller is only to require such proof of the identity of the claimant as would satisfy him that he is the proper person to receive the unexpended balance of the deposit belonging to him and placed in the county treasury for safekeeping. Ordinary prudence would require the controller to insist upon proper identification of the claimant, and he would exercise such elementary precaution in the issuance of any warrant. Appellants, as fiduciaries, could not themselves pay out any of the moneys now in their possession without requiring the same identification of a claimant, and it is required by every banking institution in paying out the funds of a depositor. The Act gives the controller no broader discretion than he already possesses under the City Charter Act of 1919,³ to require proof that the amount claimed in any warrant or claim is justly due to the person presenting it.⁴

Nevertheless, the controller's discretion must be exercised reasonably, and mandamus will lie to correct its abuse. InCom. ex rel. v. Philadelphia, 176 Pa. 588, we said (p. 592): "The duties of the controller as was held in Com. v. George,148 Pa. 463, are partly ministerial and partly discretionary, and while the courts will not review his discretion exercised in a proper case, yet he is not above the law, and his discretion is not arbitrary but legal. When therefore he is called upon by the courts the facts must be made to appear sufficiently to show that they bring the case within his discretion and that it was exercised in obedience to law. On this subject the courts are the final authority, and their jurisdiction cannot be ousted by simply putting forth the assertion of discretionary power without showing that the matter was properly within such discretion." See also Com. v.George, 148 Pa. 463.

Under the present Act after satisfactory proof has been given the controller that the claimant is the proper party to receive the unexpended balance of a deposit, there remains no discretion in that officer to refuse to issue a warrant to the county treasurer, and his arbitrary failure to do so would subject him to an action of mandamus. These considerations completely answer the assertion made in the majority opinion that the Act leaves the owners of the funds at the mercy of a possibly capricious controller.

In construing this statute as conferring upon the controller the supreme power of a judicial tribunal of last resort, the majority is creating a purely fanciful objection. In SugarNotch Boro., supra, (p. 355) we stated the rule that "courts are not to be astute in finding or sustaining objections" to acts whose validity is questioned. And we have often held that where the words of an act are susceptible of two meanings, one of which is constitutional and the other unconstitutional, we must adopt the construction consistent with the fundamental law. InMauch Chunk v. McGee, 81 Pa. 433, Justice AGNEW said (p. 438): "It is a cardinal rule . . . that all statutes are to be so construed as to sustain rather than ignore them; to give them operation if the language will permit, instead of treating them as meaningless; and I may add, or treating them as invalid.⁵ . . . It is not the purpose or the duty of the court to catch at pretexts to avoid legislation, where it can be fairly reconciled with the Constitution."

Not only, therefore, would a claimant have the right to invoke the efficacious remedy of mandamus to enforce his claim under the Act of 1937, but he would have an additional remedy which the majority opinion entirely overlooks, namely the action of assumpsit to recover from the county treasurer such of his funds as were improperly withheld from him. In attempting to distinguish the case of Com. v. Dollar SavingsBank, supra, in which we sustained the constitutionality of the Act of April 17, 1872, P. L. 62, requiring savings banks to turn over to the State Treasurer deposits unclaimed after thirty years, the majority point out that there the depositors were not deprived of their property without due process because they were expressly given an action of assumpsit against the Commonwealth for their funds. A moment's reflection will make it abundantly clear that the grant of express authority to sue the Commonwealth was essential there because the sovereign cannot be sued in its own courts without its consent.

On the other hand, municipalities and their officers are not immune to suit, and it is not always necessary that a statute which imposes an obligation upon them should also provide a specific remedy. The courts are open to those whose statutory rights are violated to afford redress according to the common law, unless an exclusive remedy has been provided by the legislature. The majority concede that a claimant may compel the sheriff or his representatives to refund the balance of his deposit by an action in assumpsit. Yet the Act of 1923 itself, which requiresthe deposit to be made, does not confer that remedy. If, as the majority suggest, moneys could not be recovered in assumpsit from a public officer to whom they were entrusted for safekeeping unless the right were created by statute, these claimants would have no present remedy against the sheriff or his representatives. But clearly this is not the law.

In the hypothetical situations presented by the majority, therefore, a claimant under the Act of 1937 would have an appropriate remedy in mandamus or assumpsit, which would satisfy all the requirements of due process. An examination of the case of Com. v. Dollar Savings Bank, supra, in the light of the foregoing conclusion, reveals its close analogy to the present case. The statute there invoked, like the Act of 1937, did not provide for escheat, but for the protection of escheatable property for both the state and the owner. In one respect the Act of 1872 went further than the Act of 1937; it transferred title to the property from the owner to the state. Here the county treasurer merely has custody of the funds forsafekeeping. And the same reasoning upon which we held that the Act of 1872 was not violative of the constitutional prohibition against the taking of property without due process of law applies therefore with even greater force to the Act here challenged.

Nor is there merit in the executors' contention that the Act of 1937 impairs the obligation of the owners' contracts with the sheriff for the return of the unexpended balances of their deposits. It must be borne in mind that they did not contract, expressly or by implication, with the sheriff as an individual. The statute required them to deposit these funds with him as a publicofficer, and it was only in that capacity that he had any right to receive the funds; consequently, if the Act of 1937 provides the owners with an equivalent or improved remedy, it has in no way impaired their contractual rights. In Thompson v. Com.,81 Pa. 314, we stated (p. 323): "The principle is not denied that when the remedy is a part of the contract it cannot be taken away, but this, as all the authorities agree, is where the remedy is essential to the contract, and the latter cannot be executed without it. But legislation which simply changes the public hand which receives and pays out, does not interfere with the remedy." See also Beaver Co. B. L. Assn. v.Winowich, 323 Pa. 483, 493; Poor District Case (No. 2), 329 Pa. 410,417.

A comparison of the remedy now available to the owners of these funds with that which they would have under the Act of 1937 leaves no doubt of the superiority of the latter remedy. At present, the owners have an action of assumpsit against private individuals, which may be barred, according to the majority opinion, by the running of the six-year period of the statute of limitations. If such an action should be prosecuted to judgment, it must be presented as a claim in the orphans' court having jurisdiction over the deceased sheriff's estate, within the time allotted by law for such claims. If the funds have been dissipated or misapplied, the owners must look to the executors personally. If by the decree of the orphans' court distribution of these funds is made to the heirs or legatees of the sheriff, as may occur if the owners do not appear and present their claims, they will thereafter be remediless.⁶ And the sheriff's records, upon which the proof of their claims primarily depends, have been removed from the sheriff's office by the executors and are now retained in their close custody. In short, the recovery of these funds has been rendered so difficult, and so dependent upon the whim of individuals, as to discourage the owners in pursuing what remedy they may theoretically have.

On the other hand, the remedy created by the Act of 1937 is complete and effective. Section 1 provides that funds which remain unclaimed in the hands of the sheriff for a period of one year, or which are in his possession at the expiration of his term, shall be delivered for safekeeping to the county treasurer, a bonded public officer. The county treasurer will be furnished with a list of the persons legally entitledthereto. The funds will remain the property of the depositors, and segregated from other moneys in the county treasury, and may not be used for any other purpose. Section 2 provides for the notification of the owners of the funds to appear and claim them from the county treasurer, and for their payment on thecontroller's warrant after satisfying him of their right to receive the moneys, as has been shown. Section 3 will compel a sheriff, upon the expiration of his term, to turn over to hissuccessor the books and records relating to such funds, so that they may remain in the appropriate public office, and not pass into the hands of private individuals and strangers. Section 4 requires the county treasurer to hold the funds for the benefit of claimants, for a period of seven years. Six months before they are escheated to the Commonwealth, claimants, if known,must be given notice by mail, and a public advertisement of theproposed escheat must be inserted for three consecutive weeks in two newspapers of general circulation. Nor will the escheatitself completely bar the claims of those entitled to the fundswho had no actual notice thereof, or who were under adisability. Such persons will have all rights of restitution preserved under the general escheat laws.⁷

Can it be doubted that the remedies which a claimant would have under this Act are not merely equivalent to, but immeasurably greater than those which he possessed prior to its passage? Can it be truly said that his "contract" is impaired in any way, or that he has been deprived of any of his property rights without due process of law? Can it be seriously contemplated that even a single claimant would prefer the uncertainty of whatever remedy he might now have to the direct and positive relief provided by this Act? It is ironical that the majority opinion in striking down the statute deprives the owners of the funds of that very protection which it professes an intention to preserve, leaving them, for all practical purposes, the empty husk of an illusory remedy.

The Act, as pointed out, not only gives to the real owners of the unexpended balances of the deposits every possible opportunity to obtain possession of them, but also provides that where such owners do not choose to claim their moneys, the funds shall ultimately pass to the Commonwealth, to which they would then belong, instead of to the family of a deceased sheriff who has not the slightest semblance of either a moral or legal right thereto.

I am also unable to see how the Act of 1937 violates the provision of Article III, Section 7, of our Constitution, forbidding the passage of special and local laws "changing methods for the collection of debts." The purpose of this section was "that no debtor, or class of debtors, should have imposed on him or them by legislation, a method for the collection of his or their alleged debts, which is not common to all other debtors of the same general character":Cameron's Account, 287 Pa. 560, 565. Here the Act makes no special provision for the collection of the funds in the hands of the sheriff and his representatives, but affords a simple method whereby they may be discharged of all obligation by surrendering moneys owned by a large number of individuals to a single officer, the county treasurer. It is extremely difficult to see in what manner this offends the constitutional provision. The Act of 1872, already mentioned, requiring savings banks to turn over unclaimed funds to the state treasurer and discharging them from their debts to depositors is, in this respect also, similar to the present Act, yet in Com. v. Dollar Savings Bank, supra, in sustaining the constitutionality of that statute we expressly referred to this feature of its operation (p. 149).

Moreover it seems to me perfectly clear that the obligation of the sheriff or his executors with respect to the deposits is not a "debt" within the meaning of Article III, Section 7. The mere fact that assumpsit will lie to compel the sheriff to refund these moneys does not necessarily stamp the relationship as one of "debtor-creditor." Assumpsit is an action embracing many forms of obligation which are not, in the strict sense, debts. In its essential characteristics the relation between the sheriff and the depositor of these funds is one of the most elementary forms of a trust. The money is entrusted to the sheriff, as a public officer, for a specific purpose. The depositor retains a special interest in the funds; he does not part with all rights therein in exchange for the personal obligation of the sheriff. As we said in Vosburgh's Est.,279 Pa. 329, 332; ". . . every person who receives money to be paid to another or to be applied to a particular purpose is a trustee, if so applied as well as when not so applied." Again, in Trestrail v. Johnson, supra, we pointed out that although one who has received funds in an official capacity may be personally liable for their loss even without negligence because of his duty to keep them safely, he is nevertheless a fiduciary. We said, (p. 396): ". . . the relation established was not that of a mere debtor, but an express trust relation," adding that, if the sheriff mingled the funds with his private property, they could be traced as trust funds. Finally, we held that when a sheriff dies in office his successor, and not his personal representatives, is entitled to the moneys received by him in his official capacity. Surely, no further illustration of the fiduciary nature of his obligation to the owners of the funds here involved is necessary.

Since the sheriff is not an ordinary "debtor" within the meaning of the constitutional provision, and since the purpose of the Act is merely to conserve these trust funds for the benefit of the rightful owners, and, ultimately, the Commonwealth, there is no violation of Article III, Section 7. The fiduciary involved being a public officer, and the funds having been entrusted to him by legislative enactment, the constitutional power of the General Assembly to make provision for their conservation would seem to be unquestionable.

I am convinced that the Act before us is a valid and wholesome exercise of legislative authority to accomplish a long needed reform in the administration of an important public office. Because I can find no constitutional justification for denying to those whose property is withheld, and to the state, the protection and benefits of the statute, I must record my earnest dissent.

Mr. Justice STERN concurs in this opinion.

¹ The Act of May 23, 1923, P. L. 347 (16 PS Sec. 2662) authorizes the sheriff to exact of any person requiring his services indemnity satisfactory to him, or prepayment of his official fees, mileage, expenses and legal costs, and provides that "any money advanced for his charges, and not earned orexpended, shall be refunded to the payer thereof." The underscored language is also carried into the Act of June 1, 1933, P. L. 1141, Sec. 3, (16 PS Sec. 2661c).

² Holding that funds received by a sheriff in his official capacity should be paid over to his successor in office, rather than to his personal representatives upon his death, Chief Justice KEPHART said, (p. 398): "Public policy demands that the control of funds in the possession of public officers remain in the channel created by law for their administration, unless some imperative reason exists to place them elsewhere." And, (p. 399): "There are other reasons for keeping the funds in the sheriff's office for distribution. The money remains in the same court in which it originated. If it is turned over to an administrator, it goes to another court where the law has provided six months' delay before litigants receive their claims. The sheriff's office requires speedy distribution of funds like these."

³ See Act of June 25, 1919, P. L. 581, Article XII, Section 3, (53 PS Sec. 3161, et seq.).

⁴ "Whenever a warrant or claim shall be presented to him he shall have power to require evidence that the amount claimed is justly due, and for that purpose may summon before him any officer, agent, or employe of any department of the city or any other person, and examine him upon oath or affirmation relative to such warrant or claim." This Section has been renumbered by the Act of June 25, 1937, P. L. 2094.

⁵ Italics supplied.

⁶ The Act of April 13, 1868, P. L. 948, Sec. 1 (16 PS Sec. 1632) requires actions on the official bond of a sheriff of Philadelphia County to be brought within five years of the date thereof (that is, within one year after the expiration of the sheriff's four-year term).

⁷ See the Act of May 2, 1889, P. L. 66, Sec. 22, as amended by the Act of May 20, 1921, P. L. 946, Sec. 1, (27 PS Sec. 91).