Keogh v. Mayor of Wilmington

| New York Court of Chancery | Sep 15, 1872

The "Chancellor :—

It is not claimed on the .part of the complainant that a contract between him and the city for this work was completed by his putting in the lowest bid under the original advertisement. It is agreed that, in order to constitute a contract binding at law, the bid must be accepted and the contract awarded accordingly. What the bill claims is that the City Council is equitably bound to award to him the contract, and that a court of equity will enforce this obligation—at least, to the extent of restraining the Council from awarding the contract to any other person.

I do not find sufficient ground for interfering with the action of the Council. There are several objections :

First. Even were it doubtful whether the City Council would be permitted to prefer a higher bidder under the first advertisement, viz : Geo. Remington, to the complainant, it does not appear that it proposes to do so. The Council did not adopt the recommendation of the street committee, but for reasons sufficient in its judgment, and which this Court is not competent to overrule, the Council abandoned the original specifications, rejecting as a consequence all the bids made under the first call for proposals, and proceeded to advertise for new bids under modified specifications. Now, however the right of the Council to prefer a higher to a lower bidder might be questioned, there can be no doubt (in the absence of any statutory or charter regulation to the contrary) of the full discretion of any person or corporation even after bids for a proposed work have been received and opened, either wholly to abandon the work, or to alter the plan of it, or to change or amend the specifications and issue new ones; otherwise there would be no protection against combinations or extravagant bidding beyond the amount of the contemplated expenditure—no remedy for defects in the plan of the work or in the specifications which the result of the biddings might disclose. Such a discretion to be, of course, fairly and honestly exercised, is universally conceded.

A case in New York, decided in 1867, The People vs. The Croton Aqueduct, Boards 49 Barb. Sup. Ct. Repts. 259, is very similar to the present. There, the Croton Aqueduct Board advertised for proposals to build certain works, and received bids, among others a bid from the relator, which was the lowest, but no award of the contract was made. After-wards, the Board deemed it expedient to alter the plan of the work to be done and re-advertised for proposals in accordance with such alterations. The lowest bidder under the first call sought his remedy by mandamus, which the Court refused, affirming the general discretionary power of parties issuing proposals notwithstanding bids may have been put in and opened, until one shall have been accepted and the contract awarded. The Court say: “ By the notice issued, they (the Board) did “not obligate themselves to award the work to the lowest “bidder; and I do not understand that the issuing of pro- “ posais alone and of itself created an obligation thus to “ dispose of it. It was a mere notice that bids would be “received : and if perchance they happened to be extrava- “ gant or far beyond the amount of the contemplated “ expenditure, I think, ordinarily, there would be a discre- “ tionary power to reject them altogether.” That case was approved by Brewster J. in Wiggins vs. The City of Philadelphia, 2 Brews. Repts. 144. It need only be added that so long as this discretion, to reject the original specifications and proceed anew, is exercised in good faith the Court can not interfere with it.

The charter has confided this discretion to the Council, and .the courts will not review the reasons of its action further than to see that the discretion is fairly and honestly exercised. The good faith and honesty of the Council in this business stands unimpeached upon the record of the cause.

But in the next place there is a feature of this case which puts beyond all question the right of the City Council to reject Keogh’s bid and even to have preferred a higher bid under the original advertisement. His bid was made subject to an express reservation to the Council of the right “to reject any or all bids” under that advertisement. He must be taken by the very act of bidding under that advertisement to have consented to this reserved right. The reservation qualifies his bid, giving it precisely the same effect as if in terms he had said to the Council, “I propose to do the work for so much, provided you “see fit to give me the job.” His acceptance of the' terms of the advertisement concludes him. Nor can he now, after having accepted the terms of the advertisement, go behind it, and raise the question whether the reservation by the street committee was, or was not, in conflict with the city ordinance of May 19,1870, providing that contracts of certain kinds should be given out to the lowest bidder or bidders, etc. The ordinance is not a provision of the charter or statute ; it is not a law, obligatory upon the City Council and all concerned, but it is merely a direction from the Council to its agents—to “ the “ officer or committee having such business in charge”— upon a subject resting wholly in its discretion ; and any departure from the terms of the ordinance in a particular case, the Council may, if it see fit, sanction or adopt, quite as effectually as it might have ordered such exceptional proceeding in advance. The question whether the ordinance has been strictly followed is one between the Council and its officer or committee, and does not concern the bidder. His acquiescence in the reserved right, by bidding subject to it, concludes him.

This case does not raise the broad question whether the City Council, being uncontrolled on this subject by any statute or by its charter, may not in all cases, even without reserving the right, reject the lowest bid put in under an advertisement for proposals, and award the contract to a higher bidder, acting of course, with good faith to the public interest. On that point an opinion is unnecessary, and would be extra-judicial and improper.

One other subject remains to be examined. The complainant, by an amendment to his bill, alleges that he is a citizen of Wilmington and a tax payer, and in that character he seeks the injunction as a measure of protection to the public interest against the additional expense and increased taxation- which may result from the action of the City Council.

I waive the question raised in argument as to who are proper parties to institute legal proceedings for the correction of abuses or breaches of trust by the municipal corporations, and will treat the case, under this branch, as properly before me. Both counsel, at the conclusion, desired that the motion be disposed of upon its merits, free from technical objections.

It will only be necessary on this point to define the limit of judicial interference with the discretionary powers vested by the Legislature in municipal corporations or their officers. The precise limit I take to be this :—that the courts may interpose so far as to protect private rights when violated or threatened by the action of these bodies, also to restrain them from the assumption of powers not granted by their charters, and further, to guard the public interests against any corrupt or fraudulent abuse of the powers granted to them. But where no private right is infringed and -the City Corporation or its officers are exercising their discretion in good faith, the Court will not revise the grounds of their proceedings nor entertain the suggestion that their action is inexpedient for the public interest. This is a plain rule, easy of application, reasonably safe for the public without needlessly trammeling the bodies or officers in whom discretionary powers are vested ; and it is also a rule well settled by judicial authority. People vs. New York, 54 Barbour S. C. R. 169; People and Flagg vs. Lowber, 7 Abbotts R. 177; Reynolds vs. Mayor of Albany, 8 Barbour, S. C. R. 597; McLaughlin vs. Kneass, 7 Phila. R. 634; and Wiggins vs. Phila. 2 Brewster, R. 444.

To apply the principle to this case :—The paving of streets in the City of Wilmington, together with a large body of other enumerated powers, is by the 27th section of the City Charter vested in the City Council. It is a discretionary power, and is confided without any expressed restriction whatever. Much argument was directed to show that the authority exercised for the paving of streets is not legislative or political, but is a trust, in the strict and proper sense, for the management and disposal of the property of the citizens, and is subject to the same rules which govern the ordinary responsibility of trustees. Be it so. The distinction is not material to this case. Either way, whether considered as an act of legislation or as the exercise of a trust in the strictest sense, the power in question is essentially discretionary. A large discretion must run through all the details of its exercise, such as the devising of suitable plans for the work, the adopting of specifications and giving out of contracts and the raising of means to pay the expenditure.

The action of the Council now drawn into question is its abandoning the original specifications of macadamizing Fourth street, rejecting the bids put in under the first call, adopting new specifications and receiving bids under them. Now as has been just decided, this proceeding violated no right, legal or equitable, of Mr. Keogh, as a bidder ; and, so far as it may concern the public interest, there is no suggestion of bad faith or corruption in the action of the City Council. It appears to have been an honest exercise of discretion in a subject-matter confided to the Council by the charter, and with which, whether it were well or ill judged for the interests of the city, the courts have no authority to interfere.

Where a discretionary power conferred by charter is found to be too large, or is at any point specially liable to abuse,,it is for the Legislature to provide proper limitasions or checks. So far as the public welfare in these matters depends upon the personal qualifications of city officers, the remedy is in the hands of the citizens at the elections. The .courts, as before stated, can interpose only when necessary to protect private rights, or to restrain the assumption of powers not granted by the charter or the fraudulent or corrupt abuse of powers granted.

The motion for an injunction must be denied and the bill dismissed.

Note, In a case determined in the year following the present one, Attorney General vs. Detroit, 12 Am. Law Reg. (N. S.) 149, the principles here relied upon were also announced by the Supreme Court of Michigan. The right to interefere by injuction with an abuse of its franchise by a municipal corporation was sustained but only in a case were the public has a substantial interest in the question and a public right is concerned. In that case a “ lowest bidder ” endeavoured to assert his rights and to enjoin the letting of a contract to the highest bidder. It was held that even where contracts for paving streets were required by law to be given the lowest bidder, “ Something is necessarily “ left to the discretion of the City Council.”

The cases are not identical, but the Michigan case will be found instructive upon this subject.

Dillon, iu his latest edition of the work on Municipal Corporations, Sec. 470, considers that the contract is incomplete until the bid is accepted. And in Sec. 832, he states the doctrine that the discretion of municipal bodies cannot be controlled, even by mandamus, which he says will not lie to enforce the award of a contract to the lowest bidder, (note 3).