Cases About Contracts Encompassing Governmental Functions

In Lobolito, Inc. v. North Pocono School Dist., 722 A.2d 249 (Pa. Cmwlth. 1998) the Supreme Court observed that since the mid-nineteenth century it had distinguished between agreements encompassing governmental functions of governing bodies and agreements encompassing proprietary or business functions, citing Western Saving Fund Society of Philadelphia v. City of Philadelphia, 31 Pa. 175, 183 (1858) (distinguishing governmental contracts, or contracts encompassing "things public," from proprietary contracts, or contracts encompassing "things of commerce"). The court noted that most contemporary illustrations of the governmental-proprietary distinction had come from this Court. In State Street Bank & Trust Co. v. Commonwealth, Treasury Department, 712 A.2d 811 (Pa. Cmwlth. 1998) this Court held that the multi-year contract custody and securities lending agreement between the treasurer and a bank encompassed a governmental function of safekeeping the Commonwealth's assets. In Falls Township v. McManamon, 113 Pa. Commw. 504, 537 A.2d 946 (Pa. Cmwlth. 1988), the Court determined that an employment contract between township supervisors and a police chief encompassed the governmental function of ensuring public safety. In County of Butler v. Local 585, Service Employees Int'l Union, AFL-CIO, 158 Pa. Commw. 519, 631 A.2d 1389 (Pa. Cmwlth. 1993), however, the Court determined that a contract between county commissioners and a private contractor to operate a freestanding drug and alcohol rehabilitation treatment facility encompassed a proprietary function and could be enforced against successor commissioners.