27 Mich. 172 | Mich. | 1873
This was an action of assumpsit brought by Fife and Haviland in the circuit court for the county of Grand ■ Traverse against the plaintiffs in error, as the sureties of one Oscar L. Noble, in a contract between said Noble and Fife and Haviland, by which Noble agreed to enter into and perform a contract with the state for the construction of a swamp-land state road, for the bnilding of which said Fife and Haviland had been the lowest bidders, and to give them as a bonus for being allowed to take their place in the contract, eight sections of the swamp lands to be received from the state for the performance of the work.
A copy of the contract is given below.
The evidence in the case tends to show the following state of facts:
JDewitt 0. Leach, in April, 1868, being the local commissioner of the road in question, whose business it was, on behalf of the state, to let the contract for the building of the road to the lowest responsible bidder, subject to the approval of the general swamp-land state road commissioners, and having given due notice of the time and place of letting the contract, proceeded, in accordance with said notice, on the 9th day of April, 1868, to open the bids, which had been received, two bids only having been put in for the whole work advertised to be let, one of which was by said Oscar L. Noble and the other by Fife and Haviland. And upon opening the bids in the presence of all these parties, it was found that Noble’s bid was for a road-bed to be graded only sixteen feet wide, which was not in accord
Such was the substance of Noble’s contract with the state, and such the circumstauces under which that contract was made, as well as the contract of Noble with the plaintiffs below, in which the defendants below were Noble’s sureties. This contract is in the following words: “An agreement made this 11th day of April, A. D. 1868, by and between W. H. Fife and Joseph B. Haviland, of Grand Traverse county, state of Michigan, parties of the first part, and Oscar L. Noble, of Antrim county, state aforesaid, of the second part, and Perry Hannah and Henry H. Noble as sureties for the performance of this contract on the part of Oscar L. Noble, party of the second part, to wit:
“W. H. Fife and Joseph B. Haviland this day agree to
“And the said Osear L. Noble further agrees, if the contract which he makes with the local commissioner is approved by the state swamp-land road commissioner, that he will give to the said Fife and Haviland four sections of state swamp land, to be selected by the said Fife and Haviland, in any of the counties through which the road may rrtn, and four sections of land to be selected from any of the unsold state swamp lands in the state of Michigan; and that he will receive from the said Fife and Haviland any description of unselected or unsold swamp lands, belonging to t]ie state of Michigan, and hold the same on his contract for them until he can obtain a title to the said lands in their names by the completion of the work on his contract, which shall all be done on or before the first day of December next, except that he will mature to the said Fife and Haviland a title to one section which they may select out of the first matured scrip he may have a right to, from the state of Michigan. It is also understood and agreed, that if the said parties should conflict in making selections of swamp land, that the parties of the first part, Fife and Haviland, shall have the preference in choice, which shall
“The parties do hereby mutually agree that if the state swamp-land road commissioner shall disapprove of the contract made between the local commissioner and Osear L. Noble, according to the stipulations herein named, then the said Oscar L. Noble shall not be holden to the said Fife and Haviland in this agreement.”
Now, while it is not claimed on the part of the plaintiffs in error that thére was any fraud on the part of' the ■ commissioner ’ in letting the contract to Noble instead of Fife and Haviland, the lowest responsible • bidders, and it is admitted that he made it with Noble upon even better terms for the state than if let to the bidders themselves upon the terms of their bid, yet it is insisted that the contract between Noble (with his sureties) and Fife and Haviland, made under such circumstances, was illegal and void, as against public policy, and that it cannot be held valid without giving encouragement to, and furnishing facilities for, corrupt and collusive combinations among bidders for such contracts, and thereby defeating the object of the legislature in requiring such contracts to be let to the lowest responsible bidder.
The introduction of the -contract in evidence was objected to on this ground, and the same question is fairly raised by several of the requests to charge,' which were refused, by the court.
The only statutes under which the commissioner was authorized to act in letting the contract on the .part of the state, for the building of this and other like roads, required
The object of the legislature in requiring such contracts to be let to the lowest responsible bidder, cannot be mistaken. It was to prevent fraud, and, so far as possible, the temptation to fraud and collusion between the officers letting the contract and the persons taking it, to excite ■competition among parties seeking to undertake work of this ■kind, and by these means to secure the doing of the work for the lowest price and on the most advantageous terms for the state.
Now, if these bidders, Noble on one side, and Fife and Haviland on the other, had, before or at the time of making their respective bids, entered into a secret agreement for their mutual profit and to avoid competition with each ■other, that for the purpose of getting a contract from the state for building this road at the highest rate or greatest ■quantity of land-allowed by the law, only one of the parties should put in a bid which, in its terms, would accord with ■the plan of the road adopted by the state and with the notice given; while the other, though not in accordance with that plan or notice, should in all other respects appear to be in accordance with the terms proposed by the state, and better in some respects than the bid of the other, but which, nevertheless, could not be accepted, because not in accordance with* the plan; thus securing in advance -the letting of the contract to one of the parties (unless others should offer better terms), without danger of competition from the other, while kéeping up the appearance of competition; and that the contract should be performed by one of the parties for the mutual profit of both; or that thé party taking the contract and doing the work should give 'to the other as his share of profit eight sections or any other portion of the land to be received from the state, if such had been the previous arrangement between the parties, it
Now, there is no evidence in the . present case, except such inferences as may be drawn from the circumstances and the contracts made, that such was the previous agreement between these parties. But had there been such previous arrangement or any arrangement by which they were to avoid bidding against each other, and yet both divide the profits of the job, it must be admitted that .this mode of bidding, the subsequent conduct of the parties leading to the contract between them, and that contract itself, were all admirably adapted for carrying such previous arrangement into effect. And it is difficult to resist the conclusion that these things tend pretty strongly to show the existence of some such previous understanding. It is perfectly clear, at least, that Noble, though ostensibly a competing bidder, was willing to take the contract upon Fife and Haviland’s bid, and to do the whole work sooner than their bid required, and yet pay them a bonus of eight sections of land (5,120 acres). And we may safely assume that, after allowing them this bonus, he was satisfied the contract would still be profitable to himself, or he would not have taken it and agreed to pay that bonus. It cannot be ■doubted that he would just as readily have bid, and taken the contract from the state, at eight sections of land less than the bid, if he had not had to give these eight sections ■of land to Fife and Haviland.
But if he, without concert with the other bidders, had made his bid for so much less land, and made it according to the specifications in the notice, so that it might have been accepted, though he would have stood a chance to get the contract, he would also have run the risk of losing it by their bidding for a still less quantity. Had the bids of
But, whether there was, in fact, any such secret understanding or fraudulent collusion between the bidders or not, is, in my opinion, entirely immaterial to the decision in the present case.
It seems to me clear that the tendency of all such contracts between bidders as that here in question,' if recognized as valid by the courts, must be to afford encouragement and give facilities to bidders to enter into and give full effect to such secret agreements and combinations, and to enable them to defeat the plain intent and object of the legislature in requiring such contracts to be let to the lowest responsible bidder; that such must be the natural tendency of allowing the commissioner to recognize any bargain or agreement between the bidders after the bids were opened, transferring to another the right of the lowest bidder to the contract bid for, and the substitution of the one for the other, as contractor with the state. It is this, tendency, rather than the fact of actual fraud in the particular transaction, which is generally recognized as rendering contracts void, as against public policy. — Mills v. Mills, 40 N. Y., 543; Tool Company v. Norris, 2 Wallace, 45; People v. Township of Overyssel, 11 Mich., 222; O’Hara v. Carpenter, 23 Mich., 410. And we think the contract sued upon must be held void upon this ground.
And, besides this general view, we think the contract
The refusal of the commissioner to allow any such substitution might not, it is true, always prevent frauds upon the state by secret combinations among bidders, but it would lessen the means and cut off some of the facilities by which such fraudulent combinations might be carried-into effect. And though we do not question the good faith of the commissioner, we think he mistook his duty' and exceeded his powers; and that his only safe and only legal course was to follow the statute, to stand by the bid, and let the contract to the parties making it, or refuse to let it at all.
The thirst for public plunder, always strong, has of late been stimulated to unwonted eagerness, and seized like an epidemic upon all classes of the community. If public officers and the courts cannot check its progress by-any obstacles of their own creation, they can, at least, refuse to aid in spreading the contagion, and may do something to discourage and check its course, by refusing to afford it such facilities as it may be within their power to withhold.
As the commissioner had no power to allow the substitution, and the contract sued upon is based .upon that illegal substitution, to which the plaintiffs were parties, it must be held void upon this ground.
The contract upon which the suit was brought being, ini our opinion,, void, the judgment of the circuit court must be reversed, with costs. The. errors being all assigned upon the bill of exceptions, we must pro forma award a new trial, though we are unable to discover how it can be rendered of any avail to the plaintiffs below.