Temple v. Portland

151 P. 724, 77 Or. 559, 1915 Ore. LEXIS 152

• Court: Oregon Supreme Court
• Decided: September 28, 1915
• Status: Published

Opinion

Mr. Justice Harris

delivered the opinion of the court.

1. The plaintiffs argue that the acts of the city were void, because the council in advance selected Hassam as the kind of pavement to be laid, thereby eliminating the possibility of competition. It has already been determined that there can be no objection to specifying a patented pavement, where the patentee offers to all bidders alike the right to make use of the patented article upon reasonable terms: Johns v. City of Pendleton, 66 Or. 182 (133 Pac. 817, 134 Pac. 312, Ann. Cas. 1915B, 454, 46 L. R. A. (N. S.) 990); Sherrett v. City of Portland, 75 Or. 449 (147 Pac. 386). Hitherto it has not been necessáry to decide the question of whether or not a municipality may legally specify a patented pavement, make it alone acceptable for a proposed street improvement, and then call for bids when no one except the patentee is in a position to make a proposal for the work; but we have now reached the point where this court must follow the way marked out in Hobart v. Detroit, 17 Mich. 246 (97 Am. Dec. 185), or adopt the rule promulgated in Dean v. Charlton, 23 Wis. 590 (99 Am. Dec. 205).

2. It is necessary to give some attention to the municipal charter: Sp. Laws 1903, p. 3. The council is empowered to order a street to be improved, “to determine the character, kind, and extent of such improvement,” and to levy assessments upon land specially benefited by the improvement: Section 374. If the council deems it necessary to improve a street, it must require the city engineer to prepare plans and specifications and to estimate the amount and probable cost of the work. If the plans, specifications and estimates of the engineer are approved, the council declares its intention to make the improvement, notice of which is required to be given: Section 375.. Opportunity to remonstrate is afforded: Section 377. If a sufficient remonstrance is not filed, “the council shall be deemed to have acquired jurisdiction to order the improvement to be made,” and the council may within a specified time, “by ordinance, provide for making said improvement, which shall conform in all particulars to the plans and specifications previously adopted”: Section 378. The estimates, plans, specifications and a copy of the ordinance are then presented to the executive board, which body has the power to award the contract for the improvement; but “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,” and the board shall have the right to reject any or all proposals received: Section 379.

It will be remembered that the council first selected Hassam pavement and that the notice for bids called for proposals on the improvement as a whole. While the composition generally known as concrete pavement contains the identical ingredients found in Hassam pavement, it is asserted that the process employed for laying the latter is protected by letters patent. The Oregon Hassam Paving Company claimed and exercised the exclusive, right to lay Hassam pavement, and did not offer to permit, any other person to make use of the Hassam process. The Oregon Hassam Paving Company was the sole bidder and received the contract. The answer expressly admits that:

“There is now, and for many years last past has been, in use in the City of Portland, and laid and constructed therein, several other kinds and classes of pavement, which are equally durable, and in some respects equally good, as the pavement specified in the foregoing proceedings, and that as to some of such kinds and classes of pavement there is and may be open, free and full competition, and that persons, companies, and corporations engaged in street improvement work may contract for and obtain in an open market all'of the necessary materials for the making of the same.”

The situation presented here is one where the pavement laid was designated by name, and the kind named was alone made acceptable; there was no chance for competition, because the right to lay the kind of pavement specified was exercised exclusively by the Oregon Hassam Paving Company, which was the only bidder; and all persons were notified that proposals to do the work must cover the improvement as a whole, notwithstanding the fact that a substantial part of the improvement was in no way connected with or a part of the patented pavement. There was no opportunity for competition. There are two rules: One is known as the Wisconsin rule, as found in Dean v. Charlton, 23 Wis. 590 (99 Am. Dec. 205), while Hobart v. Detroit, 17 Mich. 246 (97 Am. Dec. 185), exemplifies the Michigan doctrine. So much has been said for and against the two conflicting rules that nothing can be added to what already has been said. Under the Wisconsin rule, where its charter requires the letting of a contract to the lowest responsible bidder, a municipality is without authority to specify any patented pavement as the only one to be used in a street improvement, because to do so would completely efiminate competition, foster monopoly and promote favoritism. The conclusion reached in Dean v. Charlton, 23 Wis. 590 (99 Am. Dec. 205), has been approved by the following cases: State v. Elizabeth, 35 N. J. Law, 351; Nicolson Pavement Co. v. Painter, 35 Cal. 699; Fishburn v. Chicago, 171 Ill. 338 (49 N. S. 532, 63 Am. St. Rep. 236, 39 L. R. A. 482); Burgess v. Jefferson, 21 La. Ann. 143; Fineran v. Central Bitulithic Paving Co., 116 Ky. 495 (76 S. W. 415, 3 Ann. Cas. 741); Monaghan v. Indianapolis, 37 Ind. App. 424 (75 N. E. 424). The Michigan doctrine sustains the right to previously select a patented pavement and then to call for bids, and Hobart v. Detroit, 17 Mich. 246 (97 Am. Dec. 185), has been strongly indorsed in other jurisdictions: Barber Asphalt Co. v. Hunt, 100 Mo. 22 (13 S. W. 98, 18 Am. St. Rep. 530, 8 L. R. A. 110); In re Dugro, 50 N. Y. 513; Newark v. Bonnell, 57 N. JH. Law, 424 (31 Atl. 408, 51 Am. St. Rep. 609); Bye v. Atlantic City, 73 N. J. Law, 402 (64 Atl. 1056); Ryan v. Paterson, 66 N. J. Law, 533 (49 Atl. 587); Saunders v. Iowa City, 134 Iowa, 132 (111 N. W. 529, 9 L. R. A. (N. S.) 392); Yarnold v. Lawrence, 15 Kan. 126; Holbrook v. Toledo, 28 Ohio C. C. 284; Silsby Mfg. Co. v. Allentown, 153 Pa. 319 (26 Atl. 646).

It is argued that Section 374 of the charter empowers the council to specify and call for bids upon a patented pavement to the exclusion of all others, because by the terms of that section the council is authorized “to determine the character, kind and extent” of a proposed improvement; but the quoted language must be read in the light of the remaining charter provisions. The charter must be construed as a whole, and when so interpreted it is clear that it was not intended that competition should be throttled; but, on the contrary, Section 379, making it the imperative duty of the executive board to let a contract to the lowest responsible bidder, necessarily implied that there shall be opportunity for competition, so that the public will gain all the benefits which are naturally and necessarily produced by strife for business; and since the charter does prescribe a mode for the exercise of the power, the mode becomes the measure of the power: Terwilliger Land Co. v. City of Portland, 62 Or. 101 (123 Pac. 57). The municipality is not necessarily deprived of the right to make use of a patented pavement. It is common knowledge that it is the practice in more than one city so to frame the specifications as to enable different kinds of pavements to compete with each other. There is no hesitancy in fixing upon the Wisconsin rule as the one to be applied in this and analogous cases in this jurisdiction, when it is remembered that, regardless of the force of the arguments, when considered in connection with the mere theories of the Michigan doctrine or of the Wisconsin rule, the practical result of opening the doors to competition for all public improvements has been to the marked advantage of the public; and, moreover, the citizens of a municipality can generally adjust their charter to suit their wishes, because under the present form of our Constitution they are not dependent upon the will of the legislature, but have it within their own power to enact or amend their charter.

In the instant case a considerable and substantial portion of the improvement could have been segregated from the Hassam pavement. It must, of course, be admitted that the proper laying of the pavement depended upon the manner in which the subgrade was prepared, and consequently all the work necessarily preparatory for laying Hassam was for all practical purposes connected with laying the pavement; but the sidewalks could have been constructed separate and apart from the pavement. It is true that the testimony shows that experience has demonstrated that better results generally have been obtained where the contract for the entire improvement has been let to one person; and it is also true that the charter permits the executive board to let a contract to a bidder for the whole or a part of the improvement. The Oregon Hassam Paving Company possessed a monopoly on Hassam pavement, bnt it was a monopoly which was legalized and sanctioned by letters patent. No person had the exclusive right to lay the sidewalks, and yet the notice for bids tied up a considerable portion of the work, which was not patented, to the remaining part of the improvement, which was patented, and by so doing a monopoly was given to the Oregon Hassam Paving Company, not only on the patented portion, but also on the nonpatented part, of the proposed improvement. The method employed would be obnoxious, even in those jurisdictions where the Michigan rule is followed. In the Matter of the Petitions of Laura E. Eager, 46 N. Y. 100, the court says:

“Even if we should hold that patented articles may be contracted for by the city, notwithstanding the impossibility of competition, we ought to stop there, and not go to the length of sanctioning a practice whereby competition may be prevented, by unnecessarily coupling a work not patented with one which is patented, and advertising for an entire proposal for the whole.”

3. It is also contended by the city that an interpretation of the charter which would cause the charter to prohibit the city from specifying and making a patented pavement alone acceptable would be in conflict with the federal Constitution. The exclusive right of the patentee to the invention covered by his letters patent is still recognized, and he is not prevented from offering his wares for sale. Letters patent do not confer upon the patentee the right to prevent other persons from offering their wares for sale, where there is no infringement, and yet such would be the result if the argument of defendant is pursued to it§ logical conclusion.

4. The mere fact that 6 of the 63 plaintiffs signed a petition for Hassam pavement will not bar all the plaintiffs from maintaining this suit. Moreover, the petition did not authorize a violation of the charter, but, on the contrary, it asked that the improvement be done “in conformity with the charter.” The council did not follow the mode prescribed by the charter. The mode measured the power, and the plaintiffs did not take part in any transaction which would work an estoppel: Terwilliger Land Co. v. Portland, 62 Or. 101 (123 Pac. 57). If Hassam is a mere trade name, the charter was infringed upon; and the charter was likewise violated if Hassam is in fact protected by letters patent.

The decree is affirmed.

Affirmed. Rehearing Denied.