Montague-O'Reilly v. Town of Milwaukie

193 P. 824, 101 Or. 478, 1920 Ore. LEXIS 138

• Court: Oregon Supreme Court
• Decided: December 7, 1920
• Status: Published

Opinions

BURNETT, J.

1. In this condition of the record the question before us is whether or not the conclusions of law and the judgment are proper deductions from the facts found by the court. In such circumstances a bill of exceptions is not necessary, for it is said in Section 172, Or. L., that:

“No exception need be taken or allowed to any decision upon a matter of law, when the same is entered in the journal, or made wholly upon matters in writing and on file in the court.”

Milwaukie is a municipal corporation. By its charter its council “has full power and authority to determine and provide for everything necessary or convenient to the exercise of the authority herein granted; to grade, pave, plank or otherwise improve and keep in order highways, streets and alleys.” Subsequent sections of the charter, as amended in its most recent form, empower the council to order any specific improvement on petition of one or more owners of property abutting upon a street, and to levy and collect an assessment from such realty to defray the whole or any portion of the costs and expenses: Section 47. Under Section 48, if the council deems it necessary or expedient, to improve a street by reason of the petition mentioned, it shall require the city engineer to formulate plans and specifications for the improvement, together with the estimates of the work to he done and the probable cost thereof, all of which shall be filed with the recorder. If these are satisfactory to the council, it shall approve the same, and by resolution declare its purpose of making the improvement, which resolution by Section 49 is required to be posted in certain parts of the city. Section 50 provides for a remonstrance against the improvement by the owners of three fourths of the property in area abutting upon the street. In that section also we find that if there is no objection or remonstrance, or the one filed is insufficient, the council shall be deemed to have acquired jurisdiction to make the improvement, and may thereafter, within three months from the posting of the notice mentioned, by ordinance provide for making the improvement, which shall conform in all particulars to the plans and specifications previously adopted. In Section 52 we learn that upon the taking effect of the ordinance the recorder shall give notice as directed by the council, inviting proposals for making the improvement. It is also there stated that—

“Such contract or contracts shall be let to the lowest responsible bidder for either the whole of said improvement or such part thereof as will not materially conflict with the completion of the remainder thereof, but the council shall have the right to reject any and all proposals received.”

Provision is made in Section 53 for a certificate by the engineer of the completion of the work to his appro val and for giving notice of the completion and of the time when the council will consider its acceptance, so that any owner of property within the assessment district may object to the approval. Afterwards, the objection, if any, having been disposed of, the council may levy an assessment upon the abutting property for the purpose of raising funds to pay the contract price, and provision is made for enforcing the liens by sale of the property and foreclosure of the liens upon the property not sold. Section 80 reads thus:

“Neither Milwaukie nor any officer thereof shall be liable for any portion of the cost or expense of any street work or improvement, which is assessed upon the property benefited thereby, by reason of the inability of Milwaukie to collect the assessment levied for the payment of such improvement, but the contractors doing such work shall be required to rely solely upon the fund accruing from the property benefited, assessed and liable therefor; and the said contractors shall not require nor compel Milwaukie by any legal process or otherwise to pay the same out of any fund, except in cases where for any reason such assessment shall be invalid.”

The findings of fact recite the presentation of a petition to the council to improve Front Street in Milwaukie throughout its entire course through the town—

“by grading the street to the established subgrade; by constructing concrete curbs where the fill does not exceed two feet in depth; by constructing wooden sidewalks five feet in width on that portion of the street south of Washington Street except on the west side of the street between the point where said street leaves the track of the O. W. P. Railway, near Madison Street; by constructing concrete sidewalks six feet wide on that portion of the street north of Washington Street except where the fill exceeds two feet in depth, in which case the sidewalks are to be constructed of wood; by constructing inlets, catch-basins, drains, headers and other incidentals to a proper improvement; by paving the street fifty feet wide between curbs on that portion north of the point where said street leaves the track of the O. W. P. Railway near Madison Street, except on that portion where the fill exceeds two feet in depth, in which ease macadam is to be used; by paving the street thirty feet in width south of the point where said street leaves the track of the O. W. P. Railway near Madison Street, said thirty feet being the west half of street, except on that portion of the street where the fill exceeds two feet in depth, in which case macadam is to be used; said pavement, except where macadam is mentioned, to be hard surface not to exceed one dollar and twenty-five cents per square yard, exclusive of grading, curbs, catch-basins,” etc.

We ascertain from the findings of fact that the city engineer filed plans and specifications providing for and describing four different and distinct kinds of pavement: (1) Roxol bituminous pavement on a macadam base; (2) concrete pavement; (3) asphaltic concrete pavement; and (4) macadam pavement.

The council adopted a resolution of its intention to improve the street according to the prayer of the petition, and in due time passed Ordinance No. 87, entitled: “An ordinance to provide for the improvement of Front Street in Milwaukie, Oregon, from the town limits on the north boundary to the town limits on the south boundary, in said town.” The ordinance provided that:

“Front Street shall be improved in conformity with the plans and specifications heretofore filed with the recorder, and which were adopted by resolution of the town council on the thirteenth day of May, 1913.”

Requirements were provided for the form of the bids, the ratio of payment as work progressed, bonds to be given by the contractor, and, in Section 7, it was enacted that:

“Each contract shall contain a stipulation to the effect that the person, firm or corporation to whom the contract is let shall look for the payment only to the sum assessed upon the property liable to pay for such improvement, and collected and paid into the town treasury, for that purpose, and they will not require Milwaukie, by any legal process or otherwise, to pay the said sum out of any other fund.”

On June 14th, pursuant to instructions from the council, the recorder of Milwaukie published a notice to contractors, informing them that proposals would be received for paving Front Street until June 24, 1913, when they would be publicly opened and read. It was stated, in substance, that no proposáis would be accepted unless accompanied by a certified cheek equal to 5 per cent of the amount of the bid; that plans could be seen and specifications and form of proposal obtained from the recorder; and that the right was reserved to reject any and all bids. A bid was received for Roxol bituminous pavement on a macadam base, but this was rejected on June 24th. On that same date the council directed the recorder to re-advertise the invitation for ten days, according to plans and specifications, except that said advertisement should request bidders to furnish their own specifications with their respective proposals, for any kind of hard surface pavement which they proposed to lay, the same not to exceed $1.25 per square yard. This was afterwards modified, in that the invitation should be published for five, instead of ten days. In pursuance of that instruction the recorder published a notice substantially in the same terms as the first advertisement, except that the latest notice contained this provision:

“Contractors will furnish specifications for hard-surface paving only, and at a cost not to exceed $1.25 per square yard.”

It appears from the findings that at the time specified in the last notice there were several bids for improving the street: one for Eoxol bituminous pavement on a macadam base, at $1.20 per square yard; another for concrete pavement at $1.25 per square yard; and the plaintiff itself submitted three bids: (1) for bituminous pavement on a macadam base at $1.10 per square yard; (2) for El Oso asphaltic concrete pavement on crushed rock base at $1.18 per square yard; and (3) El Oso asphaltic concrete pavement on cement concrete base at $1.25 per square yard. Each of the bids of the plaintiff was less than the proposals of the other two parties as computed on the total pavement. Based solely on the proceedings heretofore mentioned, the council entered into a contract with the plaintiff on July 18, 1913, to pave the street in accordance with its proposal attached to and made part of the contract. Various terms and conditions regarding the prosecution of the work were included in the contract. Section 24 of that agreement is in these terms:

“That the payment by the party of the first part for the performance of this contract shall be made from a special fund created for that purpose pursuant to terms and provisions of the charter of said town pertaining to the construction of street improvements and for the assessment of the cost thereof against the real property benefited and for the collection of said fund, but that the party of the first part shall not nor shall any of the officers be required to pay any of said sums from any other fund than the special fund so raised for such improvement, except in the event that if for any reason said party of the first part shall fail, neglect or refuse to make or levy a valid assessment ag’ainst said real property, or any part thereof, abutting upon the part of said street to be so improved or benefited by said improvement.”

The findings recite that after the execution of the contract, as the plaintiff proceeded with the work, and from time to time, changes were made in the paving, under the direction of the city engineer, the principal ones of which were substituting pavement for macadam where the plans and specifications called for the latter surface. On May 28, 1914, the council passed ordinance No. Ill, declaring the total cost of the improvement to be $47,560.22, and an assessment was declared and levied for that amount. Certain defects in the assessment are pointed out by the findings, and it is said that the council has never passed any further ordinance or taken any further action to collect the assessment. The findings also state the aggregate amount of payments made to the plaintiff by the defendant and the issuance of certain warrants, all of which have been paid except three, totaling $8,091.14.

2. The crux of the contention is found in the clause of the notice inviting bids whereby the contractors were required to furnish their own specifications for hard surface paving only, and at a cost not to exceed $1.25 per square yard. It may be conceded, without deciding, that the town had a right to make an improvement on any of its streets under its general power over such highways, and pay for the same out of the general fund, and that another form of

power existed, based upon tbe petition of abutting property owners. It is clear that tbe proceedings in question here were taken under the second authority; that is, upon the petition of abutting property holders. That the contract was made with reference to this procedure is shown by section 24 thereof, already quoted. The plaintiff accepted the Bancroft Act bonds in part payment of the contract price, and these could be issued only on an improvement made at the expense of particular property: Section 3788, Or. L. The ordinance under which the contract was let prescribed that the payment should be derived only from assessments on the adjacent property. The proposal by the plaintiff, made part of the contract, recites that it is in pursuance of this Ordinance No. 87, so that it stands out in bold relief that the council was proceeding under the petition of the local abutters, and not in pursuance of its general authority over the streets, and that the plaintiff operated on the same basis. Having embarked upon this procedure under authority of its ordinance, the town could not ignore the same or depart from it, except by another ordinance: Hibbard v. Chicago, 173 Ill. 91 (50 N. E. 256, 40 L. R. A. 621). To the same effect is Pontiac v. Talbot Paving Co., 94 Fed. 65 (36 C. C. A. 88, 48 L. R. A. 326). As said by the Supreme Court of Washington in Stephens v. Spokane, 14 Wash. 298 (44 Pac. 541, 45 Pac. 31):

“The city may have had the power to provide for the improvement at the expense either of its general fund or at the expense of a special fund to be created by assessment upon the property benefited, but it had no power to mix these two methods of procedure. When, as in this case, it sought to make the improvement at the expense of the property benefited, it must proceed as though it had no right to make it in any other way.”

See, also, Chicago v. Brede, 218 Ill. 528 (75 N. E. 1044); Rhode Island Mortgage & Trust Co. v. Spokane, 19 Wash. 616 (53 Pac. 1104); German-American Savings Bank v. Spokane, 17 Wash. 315 (49 Pac. 542, 38 L. R. A. 259). These precedents are cited to the point that when the city has embarked upon a particular scheme of betterment prescribed by its charter, it must adhere to that throughout, and cannot piece out its defects by reference to some other mode of improvement. So, we come to the conclusion that this action is for a breach of contract said to be grounded on a special system of street improvement, and that there is not involved any violation of an agreement based upon the general authority of a city to improve streets, the expense of which was to be defrayed by general taxation.

3. Having determined, then, the procedure under which the parties were operating, it remains to decide whether or not they complied with it. According to the sections of the charter set out in the findings, the council acquires jurisdiction to make the improvement by giving notice of its intention and having disposed of remonstrances against the betterment in view. Its ordinance passed to carry into effect its intention “shall conform in all particulars to the plans and specifications previously adopted.” This ordinance becomes the law of the case, and it is erroneous to depart from it in subsequent stages of the proceeding. Again, in Section 52 we find the mandatory language:

‘‘ Such contract or contracts shall be let to the lowest responsible bidder for either the whole of said improvement or such part thereof as will not materially conflict with the completion of the remainder thereof. ’ ’

Under these provisions of its organic act, it was the imperative duty of the council previously to establish a standard of contract by which could be measured the question of who later was the lowest responsible bidder. In the case in hand a portion of the property holders in the municipality had voluntarily initiated a local proceeding for the improvement of the street. Moved by their petition, the council entered upon the special proceeding of improving the street at the expense of the abutting property. Its authority was thus limited, and anyone dealing with the municipality is bound to take notice of the limitations upon its power and the mode of its exercise. In other words, it is a question of dealing with an agent whose authority is known to be special and limited. Something is said in the findings to the effect that some of the pavements mentioned in the proposals are patented processes or designated by trade names, but the error is not necessarily affected by that feature. The vice of the proceeding would have been the same if no bidder had mentioned any copyrighted name or patented process of pavement. The departure from the charter requirements was made when the city abandoned its already established plans and specifications and required each bidder to furnish his own specifications. Hannan v. Board of Education, 25 Okl. 372 (107 Pac. 646, 30 L. R. A. (N. S.) 214), is a case in point, and the rule in cases where it is required that the contract shall be let to the lowest bidder and the necessity of prescribing a fixed standard in advance are aptly stated in the note to the report in the publication last named, thus:

“There are many constitutional and statutory provisions requiring the awarding of public contracts to the lowest bidder. In order to comply with such requirement, there must, so far as the subject matter will allow, be an opportunity for competition on equal terms; and in order that all may be able to compete on equal terms, there must be established in advance a basis for an exact comparison of bids, so that all may bid on the same thing. Accordingly, it has been held that such provisions are not complied with unless plans and specifications are prepared in advance sufficiently definite and explicit to enable bidders to prepare their bids intelligently on a common basis.”

A wealth of authority is there cited in support of the proposition. See, also, Mazet v. Pittsburg, 137 Pa. St. 548 (20 Atl. 693); Anderson v. Fuller, 51 Fla. 380 (41 South. 684, 120 Am. St. Rep. 170, 6 L. R. A. (N. S.) 1026); Missoula St. Ry. Co. v. Missoula, 47 Mont. 85 (130 Pac. 771); Ricketson v. Milwaukee, 105 Wis. 591 (81 N. W. 864, 47 L. R. A. 685); Fones Hardware Co. v. Erb, 54 Ark. 645 (17 S. W. 7, 13 L. R. A. 353); Ertle v. Leary, 114 Cal. 238 (46 Pac. 1); Huntington Co. v. Pashong, 41 Ind. App. 69 (83 N. E. 383); Packard v. Hayes, 94 Md. 233 (51 Atl. 32). It is well settled, therefore, that a previously fixed standard, to which various proposals may be referred for comparison, is an essential ingredient, where the contract is to be let to the lowest bidder.

"What, then, is the effect of departing from this rule? In Terwilliger Land Co. v. Portland, 62 Or. 101 (123 Pac. 57), Mr. Justice Bean, delivering judgment, wrote thus:

“It is a well-settled general rule that all contracts in which the public is interested, which tend to prevent the competition required by statute, are void”— citing authorities.

In that case the prevention of competition rested in the requirement of the city that a particular kind of pavement should be laid, the right to lay it being then the exclusive property of a certain concern which had not given permission on equal terms to other parties to use the process. The principle underlying the decision was that competition was in a degree stifled or impeded. This case has been distinguished, never overruled, but rather approved in principle by such authorities as Johns v. Pendleton, 66 Or. 182 (133 Pac. 817, 134 Pac.. 312, Ann. Cas. 1915B, 454, 46 L. R. A. (N. S.) 990), where it appeared that the process of paving, although patented or copyrighted, was nevertheless placed at the disposal of all bidders on equal terms, thus giving each of them an even start in the contest. In the instant case, under the call for bids embodied in the second published notice, each would-be contractor pursued his own course "without conflict with others. There was no competition. Although the computed prices differed in amount, yet that is not the sole element of the contract. The nature and quality of the pavement to be laid vitally affect the question, giving sanction to the rule that the terms of the contract upon which bidding will be required must be specified with reasonable certainty in advance. The question of the sufficiency as to precision of the plans and specifications is not here involved. It is an instance of the total absence of authoritative plans and specifications. Neither is it of any avail, as expressed in the findings, that the pavement actually laid complied substantially with one class of specifications filed by the city engineer. The reason of this is that by requiring each bidder to furnish his own plans and specifications the originals were abandoned. And it may be that, if the call for bids had particularly specified the requirements, some other bidder than the plaintiff might have bid lower. Since competition was suppressed by the abandonment of the plans and specifications prescribed by the ordinance, and the city improperly delegated to the prospective bidders its imperative duty of prescribing a plan and specifications, the proceeding is void under the doctrine of Terwilliger Land Co. v. Portland, 62 Or. 101 (123 Pac. 57). Being thus void, the contract does not furnish any control over the actions of the parties the breach of which would result in damages. Hence we conclude that, whatever might inure to the plaintiff by future legislative or other action of Milwaukie, yet no recovery can be had for a breach of the so-called contract here involved.

The judgment of the Circuit Court was not the legitimate conclusion from the findings of fact, and hence it must be reversed. Reversed.

McBride, C. J., and Harris and Johns, JJ., concur.