Will v. City of Bismarck

163 N.W. 550, 36 N.D. 570, 1917 N.D. LEXIS 213

• Court: North Dakota Supreme Court
• Decided: May 10, 1917
• Status: Published

Opinions

Birdzell, J.

This is an appeal from the judgment of the district court of the sixth judicial district, dismissing a complaint and denying-to the plaintiffs the relief sought in an action brought to enjoin the performance and effect of a cancelation of a paving contract entered into. between the city of Bismarck and the Ford Paving Company, for the paving of certain streets in paving district No. 2 in the city of Bismarck. The case is here for trial de novo and was argued on April 17th.. The appellants demand a review of the entire case. Most of the facts are contained in documentary evidence adduced at the trial, and there is very little dispute as to the material facts involved, although there is sharp conflict in the contention of appellants and respondents as to 'the legitimate inferences to be drawn from some of the facts established and as to the conclusions of law based thereon. The facts, may be briefly stated as.follows: During the.summer of the year 1916,. the city of Bismarck undertook a paving project of comparatively large extent. At a meeting of the city commission held on June 26, 1916, two paving districts were created within the city limits by the passage of resolutions. The work covered by the contract in question was to be done in paving district No-. 2, which included a large part of the residential section of the city.

On August 3d of that year, the city commission adopted a resolution of necessity in conformity with § 2704 of the Compiled Laws of 1913. At the same meeting of the commission the city auditor was directed to cause proposals for the paving to be advertised in the official newspaper, which advertisement was published as directed, appearing for the first time on August 5, 1916. The resolution of necessity was published concurrently with the proposal for bids. It appears from the record that, while this project was being discussed, a petition favorable to the proposition was signed by a number' of the citizens and property owners. Thereafter and prior to the 5th of August, 1916, communications were addressed to the members of the city commission, requesting the withdrawal from the petition of the names of the signers of the communications. The language adopted by those desiring to withdraw their names is as follows:

“We, the undersigned, having signed a petition for paving in the city of Bismarck, North Dakota, which petition is on file with.you, do hereby request that our names be taken from such petition filed with you recently.”

To the above communication there were 129 signatures attached. Between the 20th of August and the 11th of September, the latter date being the date of the letting of the contract, there were approximately 153 protests filed with the city auditor, which protests were in the following form:

“I am the present owner of the property herein described, and desire to protest'against paving in front of the same.

“Any former request in favor of paving affecting this property is1, ■hereby withdrawn.” (A description of the property followed.) The extent to which these withdrawals and protests were considered by the city commission will appear later in the discussion of the legal propositions relied upon by the appellants. On August 29th and on other dates prior to September 11th, there was published in the Bismarck Tribune, the official newspaper of the city of Bismarck, a “Notice to Property Owners,” as follows:

“This committee believes it to tbe best interest of property owners that the selection of paving material be deferred until this committee in conjunction with tbe city commission paving committee, can investigate'the merits of the various kinds of paving materials. Therefore we suggest that, should property owners be asked to sign petitions for paving material, that they do not do so without conferring with some of the members of this committee.” This notice was signed by a committee styling itself the “Citizens’ Paving Committee.” The indi- • vidual names of seven prominent citizens of the city were attached to the foregoing notice. It appears from the record that the “Citizens’ Paving Committee” and the paving committee of the city -commission co-operated in making an investigation of the various kinds of paving materials and their adaptability to the contemplated improvement of the district in question. To this end a committee visited various cities, and at least part of the expense, if not the entire cost of the joint investigation, was paid by the city of Bismarck. No petitions of property owners specifying the kind of material desired, such as would have had the effect, under § 2704 of the Compiled Laws of 1913, of precluding a choice by the members of the city commission, were filed. At the meeting of the commission on September 11th, a committee of property owners appeared before the city commission and asked an extension of time for a period of-five days, in which to permit further discussion by property owners of the kind of paving materials before the letting of the contract. The contract, however, was let on September 11th, in pursuance of the notice to bidders, except that the amount of work specified in the proposals for bids was decreased to the extent of four blocks around the courthouse and 75 feet west of Second street.

In that portion of the specifications which is headed “Notice to Bidders,” there is included a proposed contract which contains certain provisions relative to the power of the city engineer to increase or decrease the quantity of work and to supervise the same. These features of the proposed contract, which were drawn into question by the appellants, will be specifically noted later on in considering the validity of the objections raised, and we shall also note and consider in that connection some changes from the proposed contract which were made in the contract as actually entered into. At the time of the execution of the contract, the Ford Paying Company had not filed with the secretary of state the papers provided for by §§ 5238-5240 of the Compiled Laws of 1913, as a prerequisite to obtaining a license to do business in the state of North Dakota, nor had any such license been issued. The license, however, was issued later, to wit, on October 18, 1916.

On behalf of the appellants it is contended that the contract entered into in the circumstances above outlined, between the city of Bismarck and the Ford Paving Company, is invalid; First, on account of irregularities, deficiencies, and malfeasance in the acts of the city commission leading up to the letting and execution of the contract; second, that the contract itself is irregular, and for this reason defective and void. In specifying the particulars in which the proceedings of the commission were irregular, the appellants contend that the notice of proposals for bids was defective in that it was published concurrently with the resolution of necessity, and was not published for the requisite time after the expiration of the fifteen days within which protests against the paving project might be filed by property owners. Section 3702 of the Compiled Laws of 1913 gives to cities the power to create paving districts. Section 3703 authorizes the council or commission, as the case may be, to employ an engineer to prepare plans and specifications for such work and to make an estimate of its probable cost, and requires that these plans and specifications shall be approved by resolution. Section 3704 provides that after the plans, specifications, and estimates shall have been filed in the office of the city auditor and approved, the city council shall, by resolution, declare such work or improvement necessary to be done; that such resolution shall refer intelligently to the plans, specifications and estimates, and that it shall be published twice, once in each week for two consecutive weeks, in the official newspaper of the city. It further provides that, if the owners of a majority of the property liable to be specially assessed, “shall not, within fifteen days after the first publication of such resolution, file with the city auditor a written protest against such improvement, then the majority of such owners shall be deemed to have consented thereto;”, and that “at the next regular meeting of the city council after the expiration of the time for filing protests . . ., the council shall hear’ and determine the sufficiency and validity of such protests, and if two thirds of the council shall decide that such protests are insufficient or not well taken, then the city council shall have power to cause such improvement to be made and to* contract therefor, and to levy and collect assessments therefor as hereinafter provided, and all such work shall be let by contract to the responsible bidder whose, bid is the lowest therefor.” The remainder of the section deals with matters of procedure not germane to our present inquiry, but in passing it should be noted that this portion of the section touches upon a variety of subjects. It specifies what the procedure shall be when bids shall have been opened, it governs the matter of notice of time and place of future meetings, and gives the owners of the majority of the property the right to petition for the kind of pavement preferred by them. The first clause of § 3705 is the clause from which appellants draw their principal argument in this connection. It reads as follows:

“The city council shall then (the italics are ours) cause proposals for said work to be advertised for in the official paper of such city twice, etc.” The appellants argue that it is the evident purpose of the two sections of the statute, when read together, that bids for the work of construction shall be advertised for only after the time for filing protests has expired. We do not so read the statute. It is the purpose of the sections summarized above to provide a simple, yet comprehensive, procedure to be followed in making public improvements of the character here involved. The various steps leading up to the letting of the contract follow in orderly succession from the first creation of the district. Plans, specifications and estimates for the guidance of the city commission and the property owners are first required to be placed on file. Next, after full opportunity to inspect the plans and specifications and consider the estimates, the members of the city commission are empowered to pass a resolution of necessity. This resolution- presumably represents their official judgment, acting as representatives of the electors of the city, and it is required to be published for the information of the public and particularly the property owners affected by the contemplated improvement. The statute allows fifteen days after the first publication of this resolution for the filing of protests, and if, within that time, the owners of a majority of the property later to be 'specially assessed do not file a written protest, tbe majority of such owners are deemed to have consented thereto. In other words, if within fifteen days after the first publication of the resolution, protests to the number referred to are not filed, the necessity for the improvement and the propriety of making the same is deemed to have not only the official sanction of the city commission, but the .■consent of the property owners as well. It is true that it is made the ■duty of the city commission to consider the protests at the next meeting ■of the city council after the expiration of the period for filing the same, but we find nothing in this requirement of the statute which makes it imperative that consideration shall be given to these protests before ■advertising for bids. If, upon a consideration of the protests, they should be determined to be sufficient and valid, the only consequence •of such determination would be that the proposal would be dropped, and the only loss on the part of the city, in addition to the ordinary preliminary costs, would be the cost of the publication of the advertisement for bids. The purpose of the advertisement is to secure competition in "bidding for the work, and certainly this purpose is well served whether the advertisement is run concurrently with the resolution of necessity, or whether it is later published by itself. Indeed, we can readily see where it might be a matter of some advantage to those interested in a contemplated public improvement to have the advertisement for bids run ■concurrently with the publication of the resolution of necessity. Protests might well be founded upon an anticipated excessive cost, an ■element which must necessarily remain uncertain until the bids are opened. Upon opening the bids, both the objectors and the city commission would be able to pass upon an objection of this sort more intelligently than would be the case if the bids could not be received or even advertised for until the protests had been determined. Furthermore it- appears to us from a reading of the foregoing sections of the statute itself that the more reasonable interpretation of the statutory order of sequence is the creation of the district, the ordering of the plans, etc., the passage of the resolution, and “then” the causing of proposals to be advertised for; and that the word “then” as used in § 3705 has no reference to the publication of any of the preliminary proceedings, nor to' the determination of the sufficiency of protests if any are filed.

Appellant argues that the failure of the city commission, if they did so fail, to consider even a single protest legally filed, would oust them of jurisdiction to proceed further with the improvement. In this we cannot agree. If the consideration of a single protest is jurisdictional to the extent indicated, it follows that the improvement could not be made where there was a single objector unless two thirds of the council should: consider the protest insufficient. In other words, whereas a majority of the council is authorized to proceed with a work of public improvement, the weight of a single objector added to the minority would make it necessary for two thirds of the council to concur in ordering the work to proceed. The more reasonable interpretation of the statute is that where the owners of a majority of the property protest it will require a vote of two thirds of the council to determine the insufficiency of the protests and to proceed with the work. It is nevertheless the duty of the city commission to consider and weigh every protest that is filed up to the time of letting the contract. Had the statute been strictly and literally complied with in the case at bar, it would have resulted in no action whatever on protests, for there were none placed on file within the fifteen days allowed by law. It is true that, 'prior to the passage of the resolution of necessity, a number of those, who had formerly petitioned for paving had notified the city commission that they desired to withdraw their names, but such withdrawals-. can in no sense be considered as protests. They created no issue respecting the paving, nor did they raise any question the “sufficiency” or “validity” of which could be determined by the commission.

It appears in the case at bar, however, that there not only were no protests filed within the statutory period, but that such protests as were filed prior to the letting of the contract, counting as pretesting those who merely withdrew their names from the voluntary petitions, did not aggregate 50 per cent nor even 40 per cent of the property, nor did the city commission altogether ignore them. These protests were considered by the paving committee of the city commission, consisting of the entire commission, and' their conclusions based thereon, after an investigation made by them, were reported to the commission in writing at the meeting of September 11th, and this report was placed on file. This amounted to an adoption of the report and constituted action by the commission. Knopfi v. Grilsonite Hoofing & Paving Co. 92 Mo. App. 279.

It is next contended that the record discloses concerted action on the part of the “Citizens’ Paving Committee” and the paving committee of the city commission to mislead the property owners in the'paving district to such an extent as to'render improbable the exercise of their right to select the paving material. It is urged that sufficient was done in the consummation of this wrongful purpose to amount to malfeasance on the part of the members of the city commission, and that, as a result of the alleged malfeasance, they became wrongfully" possessed of the power to exercise a free hand in the selection of the paving material. In support of this contention appellants point out that the city was-required to pay for the publication of the notice published at the instaneeof the Citizens’ Paving Committee, that the city reimbursed the members of the joint investigating committee for the expenses incurred on their tour of inspection, and that no opportunity was accorded for a. public expression as to kind of paving material desired after the return of the committee and before the letting of the contract. The fact that the publication of the notice to property owners was paid for by the city is not a strong circumstance tending to indicate a previous arrangement. The bill for publication rendered by the official newspaper contains thirteen items, of which this is one. In as much as the bill embraces charges for a number of items in connection with the paving project, it is not at all likely that the question of the propriety of the payment of this item by the city would arise. Nor is the circumstance that the expenses of the investigation trip were paid by the city a sufficient indication, in our judgment, that the city commissioners were-conspiring with the “Citizens’ Paving Committee” to obtain the power-to select the paving material. The evidence that the city paid the expenses of all of the members of the joint investigating committee, and particularly the nonoffieial members, is far from satisfactory. The only testimony relating to the subject is the testimony of the city engineer,, whose expenses, it must be conceded, were properly chargeable to- the-city; and whether or not he intended to testify that the city paid the-expenses of the other members of the committee depends upon whether,, in answering a question, he understood the pronoun “you” to have been used in the singular or plural sense. After having been asked concerning his own expenses, and having answered to the effect that he and. -the other members of the committee advanced their own expenses, he was asked:

“Q. Did you afterward render an account of them to the city audit- or ?” To which he answered, “Yes, sir.” And,

“Q. You were reimbursed by the city for the expenses of that trip?” To which he answered, “Yes, sir.”

The bids were opened at the meeting of the city commissioners held •on August 28th, and immediately thereafter notice that the contract would be awarded on September 11th was published seven times in the official newspaper of the city. The joint investigating committee returned from their inspection tour a week before the date for the let-' ting of the contract. From these circumstances it is apparent that any pi’operty owners desiring to express a preference for any particular kind of paving material had full opportunity to do so. The notice of the •Citizens’ Paving Committee itself did not request the property owners to refrain from expressing themselves, but only apprized the public that a joint investigation would be made, and suggested that property owners refrain from signing petitions without first conferring with some of the members of the Citizen’s Paving Committee. In view of the fact that the statute precludes the selection of paving material by the city •commission when a petition signed by the requisite number of property •owners, expressing prference for a given material, is filed, the course pursued in this instance commends itself to our judgment as being but a reasonable method of making an intelligent selection. The record, in •our judgment falls far short of conveying evidence of collusion, and it amply sustains the negative findings of the trial court on this question.

It is next contended that the contract is invalid by reason of the fact that the proposed contract which is part of the plans and specifications adopted by the city commission and described in the proposal for bids contain clauses delegating to the city engineer powers which could properly be exercised only by the city commission, and that the ■same were misleading, deceptive, and deficient to such a degree as to violate the requirements of the statute that work should be let to the lowest responsible competitive bidder. Comp. Laws 1913, § 2708. This contention is based upon the clauses in the proposed contract purporting to •delegate to the engineer the power (1) to make alterations in the work ■which may increase or diminish its quantity to the extent of 15 per cent; (2) to direct how the work shall be done; (3) to require the contract to dismiss incompetent workmen; (4) to require the contractor to remove such portions of the work as may be deemed necessary for the discovery of improper workmanship or material, and to replace the same; (5) to prevent subletting; (6) to reject materials; (7) to notify the contractor that if within five days he shall not take such steps as in the judgment of the engineer will insure satisfactory completion of the work, the city commission may declare the contract null and void; and (8) to require that the work shall be completed to the entire satisfaction of the -engineer, and that his judgment shall be final in the interpretation of the specifications. In answer to the contention that the proposed contract was one involving a delegation of powers that could be exercised only hy the city commission, it need only be said that, as regards the effect upon the bidding, it is fair to assume that such powers as were ostensibly delegated to the city engineer were to be exercised by him only as an .agent of the city. The engineer is appointed by the city commission, and is responsible to the commission for the faithful discharge of the duties of his office. From this it would naturally be assumed that, in all ■matters involving the performance of the contract, he would use his own judgment and expert knowledge in the interest of the city which employs him and for the proper guidance of the members of the city commission who, notwithstanding -the expressions in the proposed contract, would be expected to pass final judgment upon the matters ostensibly -delegated to the city engineer. So far as the contractor is concerned, •these stipulations-mean only that he shall be required to do the work under the direction and to the. reasonable satisfaction of the other contracting party, the city of Bismarck, and it is only for purposes of convenience and efficiency that the officer of the city, in whose expert knowledge and judgment the city reposes confidence, is named as the person who will act for it. 'If, in this connection, powers are ostensibly delegated to the city engineer which in reality can only be exercised by the city commission, as, for instance, the power to determine that a -certain block shall not be paved, we cannot see wherein the attempted delegation operates to the detriment of either the contractor or the city. The reasonable interpretation of such a provision in the proposed contract would be that the city reserves the right to alter the quantity of the work to be done within a certain maximum, and that its directions will be carried out by the engineer. It appears that the parties actually placed this interpretation upon the proposed contract in the instant case,, for at the meeting of the city commission at which the contract was let,, a resolution was passed instructing the engineer not to increase or diminish the work except under the direction of the hoard of city commissioners, and a provision was inserted in the contract to the effect that alterations in the work might be directed by the city engineer with the consent of the hoard of city commissioners first had.

Neither can we see wherein the stipulations contained in the proposed contract would operate to prevent competitive bidding. It is true that a contractor who might anticipate favors from the engineer would be more apt to put in a low or reasonable bid than would one who had no reason to anticipate favorable action on the part of the engineer. But,, in our judgment, this is a matter that cannot be considered in determining the validity of the proposal. In final analysis this argument merely amounts to the suggestion that anticipated favoritism is likely to-be substituted for real competition. We do not see wherein the criticized portions of the proposed contract contribute to the probability of this result. It is the manifest object of these provisions to give the trusted expert of the city, in dealing with the contractor, ample authority to safeguard the public interests,- and in our judgment such provisions in public contracts are both expedient and wise. If it is impossible to insert and give effect to provisions such as those in question, without destroying the opportunity for competitive bidding, what practical method of insuring the faithful performance of such contracts can be suggested that will not be open to the same objection? See Salt Lake City v. Smith, 43 C. C. A. 637, 104 Fed. 457.

As to the suggestion that the amount of work to be done was indefinite, this is wholly without merit. The proposals for bids advertised specify only approximate quantities, and the bidders bid upon a schedule of items of material and work in such a way that the successful bidder was bound according to a schedule of unit prices for the various-items of work to be done. An alteration in quantity, therefore, either of excavation, filling, grading work, re-enforcing, surfacing, etc., reducing the quantity of any of such work, would but result in crediting the district with the price determined in advance, whereas an increase would be paid for according to tbe same schedule. This method operates to practical advantage in determining allowances for omissions and claims for extra work. It is idle to contend, as appellants argue, that under the stipulation covering increases of the work the contractor might be required to pave additional streets not embraced in the plans and specifications, and that in anticipation of such possible obligations, contractors would-refrain from giving favorable bids. The bidding is upon the plans and specifications, and the authority of the city commission extends only to the work therein embraced. No contractor of any experience would entertain the fears suggested by counsel. In passing it might be suggested that provisions of the character under discussion also serve to protect the city against claims for loss of profits where the quantity of the work is decreased. Walter v. McClellan, 48 Misc. 215, 99 N. Y. Supp. 78-83.

In further support of the contention that the contract is invalid, the appellants call attention to the provision requiring that the work shall be completed to the “entire satisfaction of the city engineer.” This contract does not involve a matter of esthetic taste, and would be considered legally performed when the work was done in accordance with the plans and specifications. The engineer could not prevent a recovery of the compensation by capriciously or arbitrarily withholding his approval. See Gearty v. New York, 171 N. Y. 61, 63 N. E. 804, and eases cited therein; also Richison v. Mead, 11 S. D. 639, 80 N. W. 131; Nolan v. Whitney, 88 N. Y. 648.

The appellants also argue that the contract is invalidated by § 5242 of the Compiled Laws of 1913 by reason of the failure of the Eord Paving Company to obtain a license to do business in the state in conformity with § 136 of the Constitution and §§ 5238 — 5240 of the Compiled Laws of 1913. This contention is wholly without merit. It is not shown that the company was doing business here at or prior to the time of entering into the contract in question, and it appears that a license was obtained a little more than a month after thé contract was made. See Beale, Foreign Corp. § 204.

The foregoing opinion considers all the objections urged by the learned counsel for the appellants. Finding that the objections made are legally insufficient to warrant the relief sought, and that the judgment of the trial court is in all things correct, it is affirmed.