Dean v. Charlton

Lead Opinion

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.

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Rehearing

The respondents moved for a rehearing, and the following opinion was filed at the February term, 1869

Paute, J.

The arguments presented on the motion for a reheai’ing have not changed the views of the majority of the court, as expressed in the opinion already filed. But as a rehearing is claimed upon one or two grounds not noticed in that opinion, we will briefly state the reasons for denying the motion upon those points.

The first is, that the claim of Collins for grading the street was legal and ought to have been allowed, even though the council bad no power to contract for tbe laying of tbe Nicholson pavement. But even if tbis were so, tbe only question it would present in tbis action is, whether tbe payment of that claim ought to have been required as a condition precedent to the relief sought. Eor, as tbe tax included tbe whole, tbe sale would have been illegal, although some part of it might have been valid. But we have come to the conclusion, that, so long as we adhere to the decision on the main question, there is not a sufficiently clear ground, to justify us in interfering in this action to compel a separate compensation for the' grading. The grading, although let by a separate contract, was merely accessory to the principal contract for paving the street. It was to prepare the street for the pavement, and doubtless would not have been ordered except in connection with the order for the pavement. The whole matter will doubtless be adjusted hereafter, either by obtaining sufficient authority from the legislature to enable the council to adopt the Nicholson pavement as laid, and to assess and collect a tax for it; or, if this should be refused, by the council’s conforming its action in paving the streets to the authority it already has. Whenever this is done, the tax for the grading will be assessed and collected with the other. And we deem it more advisable to let it take this course, than to attempt now to compel its payment by an exercise of the equitable jurisdiction of the court, when we cannot determine with certainty whether the grading, by itself, would not have been a detriment rather than an advantage to the lots.

But it is further claimed, that even if this pavement was authorized at the time it was contracted for, still the legislature may subsequently confer authority upon the council to adopt it, and to assess and collect a tax for it. And it is then insisted that the legislature has already done this.

The general proposition, that the legislature may confer such authority, has been already sustained by. the decision of this court in May v. Holdridge, ante, p. 93. But I cannot assent to tbe position that it bas done so in this instance.

The position is based upon the provisions of chapter 132 of the general laws of 1868. But that merely provides that where any taxes or assessments have been set aside or declared void by any court, in consequence of any irregularity or neglect to comply with the law in the proceedings, it may be afterward reassessed. It applies, therefore, obviously only to such taxes and assessments as were authorized by law. Where there is an irregularity or defect in assessing these, they may be reassessed. But it would be a strange use or abuse of such a statute, to say that it would extend to the assessment of a tax which was defective, not on account of mere irregularity in the proceedings, but for an entire want of authority. That is the ground of the objection to the tax here in question, and this statute has therefore no application to it.

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Dissenting Opinion

DixoN, C. J.,

dissenting. After this cause was decided, and pending the motion for a rehearing, the case of Hobart v. The City of Detroit, 17 Mich. 246, was decided by the supreme court of Michigan. The questions involved in the cases are the very same, the language of the Michigan statute being word for word like our own. They were new questions in that court, as well as in this; but having first been decided by this court, the opinion of the majority here was there cited and relied upon. The decision there is the reverse of that here made, and the opinion of the court by Chief Justice Cooley is such a clear and able statement and vindication of my own views, that I have thrown aside an opinion partially written before the report came to hand, and am entirely satisfied with a mere reference to that case. I would, however, call attention to a single fact appearing in this case, but not in that, which seems to make very much more strongly against the decision here. It was conclusively shown in evidence here, that any person wishing to become a bidder, or to lay the pavement, could obtain from the owners of the patent the right or royalty for so doing by paying to them a certain fee or sum for each square yard of pavement laid. The patent, or right to lay the pavement, was shown to have had an established market value, at which it could be obtained by any person desiring to avail himself of the invention. The mayor and aldermen of the city, and the public generally, were informed by the owners, at and before the time of letting the contract, £i that any person could have the right to put down the pavement and secure the bid for it ” upon the payment of such price or fee. This fact, as it seems to me, clearly shows that, instead of competition being impossible, the doing of the work was open to the fullest competition. The patent fee, or price of the right, being fixed and known, every person could bid with reference to it, as well as to the cost of labor and materials.

But it is said that after the biddings were closed, and the contract awarded, the owners of the patent might refuse to convey to the successful bidder, or might convey the right as to the particular street or streets to some third person, and that this circumstance, or the anticipation of it, would deter bidders, and defeat the principle of competition. I say, not necessarily so at all. In the first place, it is not to be presumed that the owners of the patent would so conduct themselves under any circumstances. Their property in the patent is of that peculiar kind, that its only value to them consists in the sale of it, or what may be realized from the sale. They hold it for sale at an open, fixed market pi’ice, and it is for their interests to introduce the improvement and extend the demand for it as much as possible. It is not to be presumed, therefore, that they would pursue a course so detrimental to their own interests as this would be, by discouraging purchasers, and preventing the public from using the invention. But if this be not the presumption, and the contrary, and, as it seems to me, most unreasonable and violent one is to prevail, wbat tben would be the effect upon the bidding ? Would it deter bidders, and prevent competition ? Would the successful bidder, if not the owner of the right, be obliged to forfeit his contract and pay the damages? Or might he proceed to its fulfillment? I think, notwithstanding the refusal of the owners or owner to convey the right to him, that he might proceed and perform the contract, and that the consequences to him would be the same, or very nearly the same, as if the right were voluntarily conveyed to him. If an action at law were brought for the infringement, the amount recovered would be no more than the contractor would otherwise be obliged to pay. The measure of damages in such case would be the market price or customary charge for the right, with interest added. McCormick v. Seymour 3 Blatchford’s R. 209; Sickels v. Borden, id. 535, If a suit in equity were commenced, and an injunction sought, it would be denied upon the contractor’s showing that he had tendered the customary fee or charge, which was not accepted. The owners of the patent, after holding out to bidders that they were ready and willing to convey to them for the usual compensation, would not be permitted to harass and annoy them by ill-founded and vexatious proceedings of this nature. And I think, under the circumstances, that equity would go farther, and would restrain the owners from suing at law upon proof ' that the customary charge had been tendered.

I conclude, therefore, that there was no ground whatever in this case for holding that the contract was not open to the fullest and freest competition on the part of all persons wishing to bid, and that it was not on that account illegal or void. I thought, and still think, that the judgment of the circuit court should have been affirmed.

I desire also to call attention to the case of Astor v. The Mayor, etc., of New York, in the supreme court of the -first judicial district of New York, as yet unreported, in which the same questions arose, and were decided in the same way as by the supreme court of Michigan, though upon somewhat different grounds. It was there held that the statutory principle or requirement of competition did not apply where the article to be furnished or thing to be constructed for the corporation was the subject of a patent or monopoly, and that the contract was for that reason valid, although in form let to the lowest bidder. I have endeavored to show that, if the principle does so apply, there existed no obstacle in the way of its full and free operation, so far as the contract here in question was concerned.

By the Court. — The motion for a rehearing is denied.

Case Details

Case Name: Dean v. Charlton

Court Name: Wisconsin Supreme Court

Date Published: Feb 15, 1869

Citation: 23 Wis. 590

Court Abbreviation: Wis.