187 Wis. 506 | Wis. | 1925
This rather expensive and vexatious litigation results from an attempt on the part of the city of West Allis to adopt a form of contract which finds scant, if any, authority in the statutes, and one which at times has been held by the parties to establish the relation of principal and agent and at other times the relation of owner and principal contractor. We cannot refrain from again admonishing city officials that their authority, as well as the limitations thereon, is to be found in the statutes, and that it is rather hazardous for them to venture upon uncharted seas in the discharge of their municipal duties or in the dispatch of the business of the municipality.
This is the first instance in which a so-called cost-plus contract entered into by a municipality has come before this court, and while it will not be necessary for us to decide whether such a contract on the part of a municipality is authorized by the statutes, it is rather significant that the legislature saw fit to pass a curative act for contracts such as this, as will appear by reference to ch. 290, Laws of 1921. As a rule, municipal officers will promote.public interest by trodding well-beaten paths and confining themselves within their well-established authority. They may sometimes fret under statutory limitations imposed upon their authority and sincerely believe that the interests of the municipality may be better promoted by taking or pursuing an extralegal course. In isolated cases this may be true. But it must be remembered that the limitations imposed upon the authority of municipal officers are the result of general experience, and such limitations are imposed because such
An orderly consideration of the questions presented requires that we first determine the nature of the contract between the city and the contractor — whether it is an agency contract creating the relation of principal and agent between the city and the contractor, or whether it is an ordinary builder’s contract creating the relation of ownér and contractor., Appellants claim that the contract, together with the resolution adopted by the common council under date of June 2d, fixes the status of the contractor as that of a mere agent of the city, and that as, under sec. 4549, Stats., an agent of a city is prohibited under penalty from having any financial interest in any contract with the city, that portion of the contract by which the contractor is obliged to complete the building for a certain specified sum is void, because such interest on the part of the contractor is a temptation to slight the work, thereby increasing the emoluments of the contractor. But for the fact that by the provisions of sec. 4549, Stats., such an arrangement would be of doubtful validity, it might be quite immaterial whether the relation existing between the city and the contractor was that of principal and agent or owner and contractor. In any event there is a solemn covenant in this contract on the part pf the contractor to complete the erection and construction of the building for a specified maximum amount, which is binding upon the contractor if the contract be valid. The engagement on the part of the surety guaranteeing the faithful performance of the contract makes it liable over to the city if the city pays the subcontractor, thereby causing it to pay out more than the maximum amount for which the contractor agrees to complete the erection and construction of the building. The city clearly would have an action against the surety to recover the amount thus paid in excess of the maximum amount specified in the contract, so that in the end both contractor and surety would be liable if
In the letting of this contract the city plainly proceeded under the provisions of sec. 925 — 118a, Stats., which prescribes in detail not only the manner in which such contracts shall be let, but various provisions which they shall contain. In obedience to the provisions of that section the city advertised for bids. Such advertisement called for bids in the alternative; that is to say, for the construction of the building for a definite specified amount and on the cost-plus basis. In response to this advertisement the defendant contractor submitted two bids, one for a specified amount, and the other for a maximum amount plus ten per cent, commission, any saving from the maximum amount to be divided between the city and the contractor. The city accepted the latter. It must be remembered now that this bid came in response to an advertisement for bids for the construction of the building, all in pursuance of the provisions of sec. 925 — 118a regulating the letting of contracts for the construction of school buildings. The contract entered into contains many of the provisions which sec. 925 — 118a requires to be inserted in such contracts, and the intent to make such' contract comply with the requirements of sec/ 925 — 118a is plainly apparent.
By the terms of the contract the contractor agrees, “for and in consideration of the payments hereinafter provided, ... to well and truly execute and perform the said work under the superintendence of the said building committee for the said price.” These are not apt words for the creation of the relation of principal and agent, but are the usual and ordinary words found in the ordinary builder’s
The trial court took this view of the contract, but seemed to be of the opinion that the resolution of the common council dated June 2d, which was agreed to by the surety and the contractor, changed that relation, and that thereafter the relation of principal and agent obtained between the
It is further contended on the part of the appellants that the contract was not lawfully entered into so as to be binding upon either or any of the parties. That the consummation of this contract was attended by many irregularities must be conceded. In the first place, it is perfectly apparent that the city was proceeding under the provisions of sec. 925 — 118a. The city of West Allis is a city of the fourth class organized under the general charter law. It is said that sec. 925 — 118a does not apply to the city of West Allis, because that city never adopted this section. The section itself provides that “In any city of the third and fourth class the common council may adopt this section, as provided in section 926 of the statutes.” That, however, relates to cities operating under a special charter. The section itself is plainly a part of the general charter law and applies to all cities operating under a general charter. The provision that it may be adopted by any city of the third and fourth class is for the benefit of cities operating under a special charter and enables them to adopt this particular section without adopting the entire school plan of the general charter law. '
Sec. 925 — 118a provides that the expenditure of all sums of money appropriated for the erection of school buildings shall be under the direction and authority of the board of education. Whenever the estimated cost of such a building is more than one thousand dollars the board shall make or cause to be made plans and specifications setting forth clearly and in detail the work to be done and the materia' to be used and'an estimate of the cost of the same. After such plans have been approved by the common council the
The appellants contend that the contract was illegal, and rely upon such cases as Chippewa B. Co. v. Durand, 122 Wis. 85, 99 N. W. 603; Hoeppner-Bartlett Co. v. Rhinelander, 142 Wis. 229, 125 N. W. 454; Neacy v. Milwaukee, 171 Wis. 311, 176 N. W. 871, and other cases. Those cases lay down the principle that contracts binding a municipality can be culminated only in the manner prescribed by the charter, and municipal officers must follow the prescribed procedure step by step. This doctrine has been applied, however, only for the protection of taxpayers whose money is about to be spent, or property owners whose land is about to be charged, by reason of the illegal contract. It is just
While the law contemplates the execution of the contract we are considering by the board of education, the common council was by no means without any authority in the matter. Sec. -925 — 118a provides that when the lowest bidder shall in the judgment of said board be incompetent or otherwise unreliable for the performance of the work for which he bids, the common council may authorize the board to let the work to the lowest competent and reliable bidder. Power is given to the board to adjust and determine all questions as to the amount earned under any contract by the contractor or contractors according to the true intent and meaning of the contract. Such adjustment and determination by said board shall be reported by the board to the common council, and when approved by said council shall be final between the parties and binding upon them. The statute requires bidders to submit a bond with their bids conditioned that they will enter into a contract if their bids be accepted, and
It is further contended that the discharge of the contractor was wrongful and without legitimate grounds or excuse. It will be recalled that the altercation leading up to the reletting of the work was due to the fact that the building was not completed within the time contemplated. Appellants strongly urge that the work proceeded with reasonable dispatch under all the circumstances, and that as there was no time set in the contract for the completion of the work, there was no warrant for the action of the city authorities in discharging the contractor from the job and reletting the work. The trial court found that the contractor repudiated the
It is further contended that there is no evidence of the amount of the city’s damage. The amount of that damage is established in exactly the way contemplated by the contract, which by its terms gives the board the right to relet the work if dissatisfied with the performance of the contract. The contractor certainly cannot complain where this method is pursued in case of his repudiation of the contract. The building committee re-advertised for bids and let the contract to the lowest bidder. The court awarded damages for the amount paid to such contractor, which plainly constituted the city’s damage by reason of the failure of the contractor to complete the contract.
We now come to the question of whether the surety is liable to the subcontractors for the amount of material and labor furnished by them entering into the construction of the building. As heretofore stated, the contract is tripartite, the surety being the party of the second part. The contract contains this covenant on the part of the surety:
“And the said party or parties of the second part, in consideration of the letting of this contract to said party of the. first part, for itself, its successors and assigns, or for themselves, their heirs, executors, or administrators, as the case may be, hereby guarantee and covenant and agree to and with the said city of West Allis and board of education that the said party of the first part shall and will well and truly execute and perform this contract under the superintendénce and to the satisfaction of said building committee, and that the said party or parties of the second part will well and truly pay on demand to the said city of West Allis any and all damages and sums of money which the said party of the first part shall be liable to pay to the said city under this contract or any clause or agreement therein.”
It will be noticed that the literal wording of the statute merely requires the insertion of the provision in all contracts for the construction of public works. It is the contention of appellants that the liability sought to be imposed by the statute does not arise unless the provision required by the statute is actually inserted in the contract. If this construction is correct, then the relief which the legislature attempted to afford subcontractors and materialmen is very much like sounding brass. The remedy which the legislature intended to extend may under such a construction be defeated if the parties to the contract do not insert the prescribed provision, and whether the remedy is available to subcontractors and materialmen depends not upon the law but upon the parties to the contract. If this be the proper construction of the law, then the statute might just as well not have been passed, because such was the law before. Such a statute will be construed in the light of the conditions and circumstances which gave rise to the law and to effectuate the purpose which the legislature sought to accomplish. Having discovered that purpose, the law should be construed to give effect thereto. We entertain no doubt that it was the purpose of the legislature to afford a remedy, in the nature of an action against the surety, to all subcontractors furnishing labor or material entering into the construction of public buildings and public works mentioned in the section of the statutes. This purpose may not be defeated by the voluntary act or by the oversight of the parties in failing to insert such a provision in the contract.
We see no reason for disturbing the judgment in any respect, and it must be affirmed.
By the Court. — So ordered.