Dean v. Charlton

The following opinion was filed at the February term, 1868.

PaiNE, J.

This action was brought to enjoin the sale of the plaintiff’s lands for an assessment imposed upon them for paving the streets in front of them with what is known as the “Nicholson pavement.” It is claimed that the proceedings failed in several respects to comply with the provisions of the charter, in matters so essential as to render the tax void. But another objection is taken, which goes to the foundation of the whole proceeding; and the conclusion to which a majority of tbe court bave come upon tbat, will preclude tbe necessity of examining any of tbe other questions. This objection is based upon tbe provisions of tbe charter requiring all wort to be let by contract to tbe lowest bidder, and tbe fact tbat the right to lay tbe Nicholson pavement is a patented right, and was owned for tbe state of Wisconsin by one firm in tbe city of Milwaukee. It is said tbat tbe charter authorizes a contract only for' such work as is open to competition, and tbat this work was not open to competition, because nobody bad any legal right to do it except tbe one firm tbat owned tbe patent. Upon these facts alone tbe objection seems to me unanswerable. And nothing seems to be necessary beyond tbe simple statement of tbe requirements of tbe charter as to tbe mode of letting work, and tbe fact tbat this right was a monopoly, to show tbat tbe charter is inapplicable to it, and tbat a contract for this work would be in violation of tbe necessary implication from its provisions. Indeed, tbe counsel for tbe respondent, by their course of argument, seemed tacitly to admit that there was an apparent incongruity in applying tbe provisions of tbe charter to a contract for such work as this. And they sought to avoid it in two modes. First, they claimed tbat if it was clear tbat tbe charter could not be applied in such a case — tbat it would be a mere farce to advertise to let to tbe lowest bidder work which only one firpa bad any legal right to do, so that tbe very object of tbe charter, to procure tbe work to be done as cheaply as possible, might be defeated thereby — then it must be assumed tbat tbe legislature did not intend the mode provided in tbe charter to be applicable, and tbat the work might be contracted for without regard to tbat mode.

Tbe other mode of avoiding tbe objection was, by proving tbat tbe owners of tbe patent were anxious and willing to sell tbe royalty, and bad offered it for sixteen cents per square yard. And upon this proof it is insisted tbat tbe principle of competition was preserved, and tbe requirements of tbe charter complied witb.

I will state, as briefly as may be, wby I think neither of these theories overcomes the objection. The first assumes the correctness of the position that the charter cannot be applied to a contract for work the right to do which is a' patented monopoly. And it then infers, that because the charter is inapplicable, the city had the general power to make the contract without regard to its restrictions, and that such was the legislative intent. The error lies in this inference. This position was attempted to be supported mainly by the case of The Harlem Gas Co. v. The Mayor, etc., 33 N. Y. 309. The counsel on both sides rely upon that case, and it will therefore be proper to examine it carefully, to see what position it sustains.

The action was on a contract for lighting certain streets in New York city with gas. The company had by law the exclusive right to furnish gas for that part of the city. The charter required all contracts for work and supplies, beyond a certain limitation in value which this contract far exceeded, to be let by contract to the lowest bidder.. The contract for this gas was not so let, and therefore it was claimed to be void. The court held that inasmuch as the company had the exclusive right to furnish the gas, the provision of the charter requiring the contract to be let to the lowest bidder was inapplicable, and that it would be absurd to attempt to apply the provision in such a case. Poetee, J., says: “ In the present case, an adoption of the construction claimed by the municipal authorities would lead to the absurd conclusion, that the legislature designed to force a provision into the city charter compelling the corporation to pay whatever price the sole bidder might choose to exact in his sealed proposals for the use of property in which he has an absolute monopoly, and in relation to which there can be no competition within the range of legal possibility.”

BeowN, J., says: “ Had the common council, in place of this condition, invited proposals in the usual form, there could have been but a single offer at best, and the provisions of the statute would have failed of effect, because they were not applicable to such a subject.”

The case, therefore, fully sustains the position of the appellant’s counsel, which seems obvious enough in itself, that a provision requiring wort to be let to the lowest bidder is not applicable to a contract for work as to which there can be no competition. And if not applicable to it, of course it can furnish no authority for such a contract. And if such a contract is made, it must be sustained, if at all, by authority derived from some other source than such a provision of the charter.

But the court in that case -did hold the contract valid, and the city liable. And this branch of the decision the respondents’ counsel rely on, to sustain their position, that, if the charter was inapplicable, these proceedings should be sustained, whether conducted in accordance with it or not. But the cases are so different in respect to the grounds of that part of the decision, that it becomes inapplicable here. The power to contract for the lighting of the streets of the city was assumed, in that case, to be one of the general powers of a municipal corporation. Hence, so soon as the court came to the conclusion that the mode of contracting pointed out in the charter was inapplicable in such a case as they had under consideration, they had no difficulty in sustaining the contract under the general corporate power of the city. But here the question is quite different. It is not necessary to inquire whether the city of Madison, by virtue of its existence as a municipal corporation, would have had the- power to contract for paving its streets with the Nicholson pavement, at the expense of the city, after discovering that the provisions of the charter enabling it to cause its streets to be paved at the expense of the lots were inapplicable for that purpose. If it bad bad sucb power, and bad made sucb a contract binding tbe city at large, tbe question would then bave been like that decided by tbe New York court. But bere it made no sucb attempt. It seeks bere to charge tbe expense upon tbe lots, and tbis it bas no general power to do by virtue of its mere existence as a municipal corporation; but, if done at all, it can only be done under tbe statutory authority in its charter, and by complying substantially, if not strictly, with all its requirements. So soon, therefore, as we arrive at tbe conclusion, that these requirements are inapplicable and inadequate to a contract for a work tbe right to do which is an exclusive monopoly, it ends tbe question • for there is no general power of tbe city to fall back upon.

I think, therefore, that while tbe case in New York does show that tbe contract in tbis case was outside of tbe scope of the provisions of tbe charter, it fails to show any general authority in tbe city by which, it could be sustained, independent of those provisions. In truth, it would seem toó late for us now to say that these requirements of tbe charter are not applicable to contracts for paving streets, for tbe contrary bas uniformly been held by tbis and other courts. Myrick v. La Crosse, 17 Wis. 442; Mitchell v. Milwaukee, 18 id. 92; Kneeland v. Furlong, 20 id. 431; Brady v. New Fork, 20 N. Y. 312.

Neither can I see that tbe other mode of answering tbe objection is successful. . On proof that tbe owners of tbe patent were willing to sell tbe “royalty,”, as it is called, for sixteen cents per yard, it is said that other parties might-bave bid, and tbe principle of competition was preserved. If an arrangement had previously been made, by which tbe owners of tbe patent became bound to transfer tbe right at sixteen cents per yard, and tbe contracts bad then been let in pursuance of tbe charter, for tbe materials and labor, subject to the condition of obtaining tbe patent, tbe principle of competition, so far as tbe labor and materials were concerned, might have been preserved. But even 'in that case there could have been no competition as to the price of the royalty. So far as that constituted a part of the cost, there was no possibility of introducing this principle at all. But if the method suggested had been resorted to, so as to preserve competition in the labor and materials, perhaps the fact that it could not be preserved as to the comparitively small balance of the expense, would not have avoided the whole. It is unnecessary to determine whether so strict an application of the spirit of the charter would have been required.

But no such method was resorted to. On the contrary, the proposals were for furnishing the materials and doing the wort, without any thing in regard to the price of the royalty, and without any previous agreement with the owners of it. There could be no competition in this method. The fact that the owners were willing to sell it at sixteen cents per yard, does not show that there could have been. For, assuming that any contractor might have safely relied on the willingness of the owners to sell it at that price, and assuming that the latter, in case they desired to bid for the work themselves, would not use their power over the patent to aid in obtaining the contract, as far as possible, by preventing others from getting it — assumptions which it would scarcely be safe for contractors to act upon — still there could have been no safety in bidding. For suppose A, B, and C, all bid, none of them making any'previous arrangement for the purchase of the royalty ? Before the bids are opened, one of them, thinking to get the contract, desiring in good faith to do the work, goes to the owner of the patent and buys the royalty for that part of the city where the work is ordered to be done. The bids are opened, and some one else has the lowest bid, and gets the contract. What position would the successful bidder be in, bound under somewhat severe penalties to enter into and complete his contract, and yet with a rival and disappointed bidder having the sole legal right to do the work ? Certainly this shows that no contractor could safely bid, and bind himself, in the manner here required, with sureties and stipulated damages for a failure, without in the first place procuring the right from the owners. For, although they might be willing to sell, that very willingness would make it unsafe for him, because some other bidder might step in and secure the right, in anticipation of the opening of the bids. But if any contractor should, before bidding, purchase the right, then nobody, except him, could safely bid. It seems clear, therefore, that proof merely of the willingness of the owners to sell the right at a fixed price, does not preserve competition. And the result in this instance, if not conclusive, is yet very satisfactory proof of it. There was no bid except that of the owners of the patent.

It has been compared to the case of work ordered to be done with a particular kind of stone, the quarry of which is owned by one who is willing to sell to all alike at a fixed price. Undoubtedly in that case there might be free competition. If the owner of the quarry, before the contract was let, should sell to one bidder enough stone for that work, he might the next day sell as much to another bidder. And if neither of these should get it, he might afterward sell whatever was needed to such person as did get the contract. Such being the case, any bidder could safely wait until he obtained the contract before making arrangements for his stone. But there is a marked difference in the case of the patent. There the owner, having disposed of the right for any particular district to one person, cannot afterward furnish the same right to any other. This difference destroys the whole force of the illustration, and shows that the safety of bidders would be very different in the two cases.

It seems to me, therefore, a conclusion derivable from the very nature of the case, that competition could not be and was not preserved in tbe letting of this contract; and that it was, therefore, beyond tbe scope and in violation of tbe spirit of tbe charter.

It may be said that this pavement is of a superior character, and that it is very desirable that cities should have authority to cause it to be iaid. It may be so, but if so, I think the aid of the legislature will have to be invoked, and that there is no authority to contract for it under charters which require the work to be let by contract to the lowest bidder.

It was suggested that even though this assessment should be held illegal, still there was nothing to show it to be inequitable, and therefore a court of equity ought not to interfere. But that principle has never been applied to these special assessments. And certainly it could not be applied where there is no legal authority to contract for the work at all, to pay for which the assessment was imposed.

I think the judgment should be reversed, and the cause remanded, with directions to enter judgment for the plaintiff for a perpetual injunction according to the prayer of the complaint.

By the Court. — Ordered accordingly.

DixoN, O. J., dissented.