State Ex Rel. Printing-Litho, Inc. v. Wilson

128 S.E.2d 449, 147 W. Va. 415

• Court: West Virginia Supreme Court
• Decided: December 4, 1962
• Docket: 12188
• Status: Published

Opinions

Browning, Judge:

In this original proceeding in mandamus, relator, Printing-Litho, Inc., seeks to require the respondent, Curtis S. Wilson, Director of Purchases of the State of West Virginia, to honor the low bid submitted by the relator with regard to certain miscellaneous printing and binding for the State of West Virginia for the years 1962-1964, hereinafter designated as “Contract No. 3”.

The petition identifies the parties and alleges: the solicitation by the respondent, pursuant to statute, of sealed bids for printing “Contract No. 3”; the timely submission by the relator, with bond in the amount of $50,000.00, of a bid of $62,049.50, which bid was the lowest of the five firms competing for the work, the next lowest bid being $113,316.20; that relator is the lowest responsible bidder as defined by statute, has under lease adequate facilities to fulfill all requirements and the United States Government is presently employing such facilities on similar contracts for quantities far in excess of those required by the state; the President and General Manager of relator have had more than fifteen years experience with the same printing contract in previous years and are thoroughly familiar with the quality, quantity and service required by the state; the relator is ready to give a satisfactory surety bond for the full amount of the bid guaranteeing faithful performance and compliance with all terms, conditions and requirements of said contract; and, despite the fact that relator is the lowest responsible bidder, respondent has rejected relator’s bid.

A rule to show cause why the writ should riot issue as prayed for v/as issued by this Court on August 21, 1962, returnable September 5, 1962, at which time respondent appeared and answered, admitting all of the factual allegations of the petition but averring that relator “does not have the qualifications necessary to perform the work required under its bid and was refused the contract because its financial statements do not show that it is a responsible bidder and able to perform the contract as set out by the State of West Virginia.”

Discovery depositions of Mr. C. F. Boyd, President of Printing-Litho, Inc., and Mr. F. R. Clark, were taken by agreement of counsel.

Mr. Boyd testified, in substance, that: Printing-Litho, Inc., was incorporated on May 24, 1962, with an authorized capitalization of $2,000,000; the present operating capital is approximately $4,000 of which he has contributed $1,800; the sale of stock to the public has not yet been authorized by the Securities Commission of the State; Printing-Litho, Inc., has leased the entire facilities of the former Clark Printing Company of Elkins with an option to purchase at the expiration of the lease, and has obtained oral agreements with two other printing plants, one in Elkins and one in Philippi, 26 miles distant, the owners of which plants are shareholders of Printing-Litho, Inc., to use their facilities; the facilities under lease would be insufficient to perform the contract if the equipment at the other plants in Elkins and Philippi became unavailable, however, an option to purchase for $3,000.00 additional equipment sufficient to perform the contract, has been obtained; both he and the production manager, Mr. Dobreff, have had at least 15 years experience in the performance of state contracts similar to “Contract No. 3”; Printing-Litho, Inc., employs 6 production workers, formerly with Clark Printing Company, and, though the plant is not unionized, the wage scale paid to these employees is at least equal to the prevailing wage in the area; creditors of Clark Printing Company have filed suit to repossess an item of the equipment Printing-Litho, Inc., has under lease; Printing-Litho, Inc., has performed, and is presently performing, similar contract printing work for the United States Government; the difference of $51,-266.70 between the bid of Printing-Litho, Inc., and the next lowest bidder, is largely due to production costs; and, Printing-Litho, Inc., has received assurance from the bonding company which posted the $50,000 “bid” bond that it is willing to give whatever “performance” bond is required in the execution of the contract. He also stated that Printing-Litho, Inc., did not have at the time of his deposition, $3,000.00 with which to exercise the option for additional equipment.

Mr. Clark, called as a witness for respondent, testified to the effect that: he was formerly engaged in the printing business as Clark Printing Company, however, the great proportion of the assets of said business are privately owned by his wife; neither he nor his wife have any interest in Printing-Litho, Inc., except as lessors and an option to purchase shares of stock within six years; Clark Printing Company has several outstanding judgments against it; three attempts were made to unionize the plant which contributed to Clark Printing’s financial difficulties, however, Printing-Litho, Inc., is presently paying “considerably higher wages than I ever intended to, which is greater than the prevailing wages in the area”; Printing-Litho, Inc., is paying as rental. $1,500 a month, which is sufficient to defray the payments on all equipment (five pieces) under conditional sales contracts including that which was the subject of a suit for repossession and, in the event of his default, Printing-Litho, Inc., has an option under the lease to make such payments; and, all other equipment (sixteen pieces) are owned outright by Mrs. Clark.

Chapter 5A, Article 3, of the Code, as amended, after directing the director of purchasing, inter alia, to solicit sealed bids for the purchase of commodities and printing that is estimated to exceed two thousand dollars, provides in Section 14 that:

“Bids shall be based on standard specifications .... All open market orders, purchases based on advertised bid requests, or contracts made by the director or by a state department shall be awarded to the lowest responsible bidder, taking into consideration the qualities of the articles to be supplied, their conformity with specifications, their suitability to the requirements of the state government, and the delivery terms. Any or all bids may be rejected. ...”

Section 4 of the article commands the director to “adopt and amend rules and regulations to:”

“ (6) Prescribe the amount of deposit or bond to be submitted with a bid on contracts and the amount of deposit or bond to be given for the faithful performance of a contract; . . . .”

In the case of Butler v. Printing Commissioners, 68 W. Va. 493, 70 S. E. 119, 38 LRA (NS) 653, an issue similar to that in the instant proceeding was presented to this Court, the distinction being that in that case the contract had already been awarded to another bidder. The syllabus in that case is as follows:

“1. A mandamus will not go to a bidder for state binding to compel the Commissioners of printing to award him the contract for such binding after they have awarded it to another bidder, though the former was the lower bidder, the function of the board of commissioners involving discretion.

“2. Quaere. Is this a suit against the State?”

To answer this quaere, this Court has since had many occasions to interpret the provisions of Section 35, Article VI of the Constitution which reads: “The State of West Virginia shall never be made defendant in any court of law or equity, except the State of West Virginia, including any subdivision thereof, or any municipality therein, or any officer, agent, or employee thereof, may be made defendant in any garnishment or attachment proceeding, as garnishee or suggestee.” It was held in Mahone v. State Road Commission, 99 W. Va. 397, 129 S. E. 320, Hardy v. Simpson, 118 W. Va. 440, 190 S. E. 680, and Schippa v. West Virginia Liquor Control Commission, 132 W. Va. 51, 53 S. E. 2d 609, 9 ALR 2d 1284, that the immunity of the state in a court of law or equity with the exception therein provided applies as well to the agencies and boards created by the Constitution and by valid acts of the legislature. However, this Court has held that where an agent of the state acts unlawfully he, individually, is not protected by this section of the Constitution. Downs v. Lazzelle, 102 W. Va. 663, 136 S. E. 195. It has also held that this section does not apply where the duty involved is purely a ministerial one. In State v. Shawkey, 80 W. Va. 638, 93 S. E. 759, a writ of mandamus issued against members of the Board of Public Works directing them to perform certain acts which the Court held to be purely ministerial duties. See also Fidelity, etc., Co. v. Shaid, 103 W. Va. 432, 137 S. E. 878, and cases there cited. Likewise, the Court has held that mandamus will he to compel the State Road Commissioner in a proper case to institute condemnation proceedings against a landowner after the completion of a public highway. Taylor v. Baltimore & Ohio Railway Co., 138 W. Va. 313, 75 S. E. 2d 858.

The principle to be derived from these cases is that an action or suit instituted by a person entitled to the performance of a duty against the official charged with the performance of that duty is not a suit against the state within the prohibition of Section 35, Article VI of the Constitution of this State. Houston v. Ormes, 252 U. S. 469, 472, 40 S. Ct. 369, 64 L. ed. 667; Fidelity, etc. Co. v. Shaid, 103 W. Va. 432, 438, 137 S. E. 878. See also Hamill v. Koontz, 134 W. Va. 439, 59 S. E. 2d 879.

Thus, we are confronted with the primary issue in this case of whether the action of the Director of Purchases, clothed by the Legislature with discretion, is controllable by mandamus.

In the Butler case it was said:

“. . . Our constitution and fabric of government divide governmental powers into three grand divisions, and prohibit the assumption by those exercising the powers of one of them of the just powers of another. This is a cardinal principle, a distinguished feature of our free government, always to be kept in mind; a great light which is always to be thought of in such cases as the present. The functions of the Commissioners are very important in public administration, and are an essential part of the executive department. The judiciary must be very cautious when it interferes with the functions of the executive department. It was said by able men in an early period of our country’s history that the courts were usurpatory of power, and inclined to dominate over other branches of government. The courts should not justify this charge. It does seem that the constitution and statute intend and mean to invest the matter before us exclusively with this executive board erected by the Legislature, under the mandate of the Constitution to deal with it. It is executive or political action, not judicially reviewable. It would seem that it was never intended that such matters should in anywise fall under the supervision of the courts, and be the subject of private litigation. If so the public wheels might be impeded. The Legislature might meet and find its supplies for business involved in a law suit. So with the public offices. Where would be the end of delay and confusion? The character of the transaction or business repels that construction of the law. I do not say that under no circumstances can courts affect the action of executive officers where void of discretion, and only ministerial; but I do say that in this matter they can not do so; I do say that where with an executive commission of the character involved in this case there is lodged judgment and discretion, a court cannot control it by mandamus; and we hold that this board is vested with discretion in passing on such bids. It is said in Merril on Mandamus, sec. 117, that the writ will go to compel public officers to let contracts to the lowest bidder, but not when vested with discretion. This is only the general rule that it will not go to control discretion. But it is urged upon us that the law says that the contract must be given to the lowest bidder, without any discretion in the printing commission, if he is pecuniarily responsible. This cannot be sustained. In Douglass v. Commonwealth, 108 Pa. 599, an act directing contracts for supplies to be awarded ‘to the lowest responsible bidder,’ and it was held that the word ‘responsible’ does not refer to pecuniary ability only, that the act called for ‘the exercise of discretionary powers on the part of the city, and if they act in good faith, though erroneously or indiscreetly, mandamus will not lie to compel them to change their decision.’ State v. McGrath, 91 Mo. 386, holds that ‘the duties of officers entrusted with the letting of contracts for public works to the lowest responsible bidder are not of a strictly ministerial nature, but involve the exercise of such a degree of official discretion as to place them beyond the control of the courts by mandamus.’ It held that mandamus should not go to compel the commissioners of public printing to award the contract to one on the ground that he was the lowest bidder. . . .”

This language was tempered in the later case of Wysong v. Walden, 120 W. Va. 122, 130, 52 S. E. 2d 392, 398, where it is stated: “. . . Generally, the awarding of contracts by a board of education resides in the sound discretion of the board. Courts should hesitate to interfere with that discretion. Butler v. Printing Commissioners, 68 W. Va. 493, 70 S. E. 119, 38 LRA (NS) 653. Mandamus as a rule will not lie at the hands of an unsuccessful bidder to disturb this discretion. 80 ALR, Note 1382-1398. Where, however, the lowest bidder is responsible and, through fraud or corruption, the bid is rejected, such rejection constitutes a violation of official duties, justifying removal of the officers guilty thereof. . . . we advance the caution that a ‘responsible’ bidder embraces both financial and moral responsibility.”

An adequate discussion of the problems arising in the present situation, and the decided cases, will be found in 34 Am. Jur., Mandamus, § 160; 43 Am. Jur., Public Works and Contracts, §§ 41-45; 80 ALR, Note 1382-1398; 27 ALR (2d) 919-941, and a summarization and analysis of the text and decisions therein would serve no purpose except to unnecessarily extend the length of this opinion. Suffice to say that the better reasoned rule appears to be, and we so hold in the instant proceeding, that while a court ordinarily will not interfere with the action of an officer or board clothed with discretion, it will do so where there is a clear showing of fraud, collusion or palpable abuse of such discretion, and any implication to the contrary in the Butler case is expressly disapproved.

We come now to the question of whether the record in the instant case will warrant the intervention of this Court by mandamus. It is extremely regrettable that the Director of Purchases did not testify. Under the circumstances it must be presumed that his testimony would not have supported his theory of the case. Rohrbaugh v. Rohrbaugh, 136 W. Va. 708, 68 S. E. 2d 361; Wolfe v. Wolfe, 120 W. Va. 389, 198 S. E. 209; Union Trust Company v. McClellan, 40 W. Va. 405, 21 S. E. 1025; Piccolo v. Woodford, 184 Va. 432, 35 S. E. 2d 393. However, even indulging in such presumption, this Court cannot say, upon the record before it, and the facts as stated in the beginning of this opinion will not be repeated here in full, that the respondent has abused his discretion in refusing the bid of relator even though it was much lower than the next bid. The relator was incorporated May 24, 1962, has not had its application approved by the Securities Commission of this state to raise two million dollars as operating capital and the record shows by relator’s witnesses that the present operating capital is approximately four thousand dollars. It is admitted that relator does not have the equipment necessary to efficiently perform “Contract No. 3” at its Elkins plant, nor the $3,000 necessary to exercise its option to purchase sufficient equipment. While there is testimony that sufficient equipment in other plants is available for use by relator, there is no contract assuring its availability, nor any showing in the record that such oral agreements are customary or considered binding in the printing industry.

The general rule is that financial responsibility alone is not sufficient to meet the qualifications of “lowest responsible bidder,” as provided by our statute and it is not conclusive, therefore, upon the respondent that a bid bond has been given by relator and that it is alleged that a performance bond will be forthcoming if the contract is awarded to it. Wilmott v. State Purchasing Comm. (Ky.) 54 S. W. 2d 634; Butler v. Darst Printing Commission, 68 W. Va. 493, 70 S. E. 119, 38 LRA (NS) 653; 86 ALR 131. It is the responsibility of the Director of Purchases of this state to be satisfied, among other considerations, that the printing contract can, and will, be complied with; that the materials required for the different departments of the government be promptly provided; and that the facilities of the printer are such as to insure competent and efficient performance.

There is no allegation in the petition filed herein nor in the evidence even suggesting fraud or corruption on the part of the respondent in rejecting the bid of the relator. The case of the relator is based solely upon the allegation that the awarding of the contract to it would save the taxpayers a substantial sum of money. All other things being equal it is certain that the writer of this opinion, and the other members of this Court, would agree that the awarding of the contract to the lowest bidder and thus saving money to the taxpayers would be most commendable. However, that is not the final test, and this Court cannot say, as a matter of law, that the Director of Purchases, in rejecting the bid of the relator, so abused his discretion in the premises that his action is subject to control by mandamus.

The writ of mandamus will be refused and the rule heretofore awarded will be discharged.

Writ refused.