Commonwealth v. Borough of East Washington

351 A.2d 687, 23 Pa. Commw. 382, 1976 Pa. Commw. LEXIS 861

• Court: Commonwealth Court of Pennsylvania
• Decided: February 18, 1976
• Docket: Appeal, No. 912 C.D. 1975
• Status: Published

Opinions

Opinion by

Judge Crumlish, Jr.,

This is before us on the Auditor General’s Motion to Quash the Exceptions filed by the Borough of East Washington (Borough). Borough’s exceptions were directed against a purported adjudication of the Auditor General. Briefly, the facts are as follows: The Auditor General conducted an audit of Borough’s Police Pension Fund. The audit disclosed certain alleged improper expenditures by Borough. Based upon those findings, the Auditor General recommended that the Commonwealth withhold future disbursements of casualty insurance premium tax allocations to Borough.

The issue is whether the audit report is an “adjudication” under the Administrative Agency Law¹ (Act). “Adjudication” is defined in Section 2² of the Act, 71 P.S. §1710.2 (a) as:

“[A]ny final order, decree, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities or obligations of any or all of the parties to the proceeding in which the adjudication is made. . . .”

Under Section 2 of the Act of June 28, 1895, P.L. 408, as amended, 72 P.S. §2262, the State Treasurer is required to pay to the treasurers of the municipalities in the Commonwealth the premium tax paid to the Commonwealth by foreign fire insurance companies doing business within the municipalities. The municipalities, in turn, must apply the money to the relief or pension funds of the local fire department. Section 1 of the Act of May 12, 1943, P.L. 259, as amended, 72 P.S. §2263.1, outlines a similar arrangement whereby the tax on premiums of foreign casualty insurance companies are turned over to municipalities for payment into the police pension funds.

Section 403 of the Fiscal Code³ provides:

“The Department of the Auditor General shall have the power, and its duty shall be, to audit the accounts and records of every person, association, corporation, and public agency, receiving an appropriation of money, payable out of any fund in the State Treasury, or entitled to receive any portion of any State tax for any purpose whatsoever, as far as may be necessary to satisfy the department that the money received was expended or is being expended for no purpose other than that for which it was paid. Copies of all such audits shall be furnished to the Governor.

“If at any time the department shall find that any money received by any person, association, corporation or public agency, has been expended for any purpose other than that for which it was paid, it shall forthwith notify the Governor, and shall decline to approve any further requisition for the payment of any appropriation, or any further portion of any State tax, to such person, association, corporation or public agency, until an amount equal to that improperly expended shall have been expended for the purpose for which the money improperly expended was received from the State Treasury.”

All other things being equal, Borough was entitled to receive its proportionate share of the Commonwealth’s tax on casualty insurance premiums. Based upon his determination that the funds were misappropriated, the Auditor General, pursuant to the mandate of Section 403 of the Fiscal Code, declined to approve any further payments of these tax revenues by the State Treasurer to Borough. The action of the Auditor General was final, affected Borough’s property rights, and was, therefore, an “adjudication” within Section 2 of the Act.

However, in order for an appeal from this adjudication to proceed on the merits, this Court must have the benefit of a complete record of the proceedings below, including the Auditor General’s report.

Accordingly, we

0edbr

And Now, this 18th day of February, 1976, the Motion to Quash is denied with a direction that a complete record of the administrative proceedings below be presented to this Court prior to further consideration of the merits of the exceptions filed by the Borough of East Washington.

1 . Act of June 4, 1945 P.L. 1388, as amended, 71 P.S. §1710.1 et seq.

2 . As amended by Act of July 31, 1963, P.L. 425.

3 . Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §403.