125 S.E. 644 | S.C. | 1924
Lead Opinion
December 10, 1924. The opinion of the Court was delivered by
I do not concur in the opinion of Mr. Justice Cothran. As to the plaintiff's appeal, I think his Honor was correct in finding and holding that the negotiations between him and the defendants did not amount to a contract and that the plaintiff had no cause of action for specific performance. Wilie v. Price, 5 Rich. Eq., 91.Harmon v. Tel. Co.,
I think the exceptions of the defendant should be sustained on the ground that the City Council of Florence is the instrumentality through which the corporation exercises its powers and performs its duties, and the statute expressly gives to such council plenary authority to act, respecting any subject that shall appear to them necessary and proper for the welfare of the city.
The City Council of Florence is vested not alone with the power to make contracts concerning the property owned by the city, but in addition with full discretion in regard thereto, and under the facts of this case the Court has no right and authority to interfere with this discretion by substituting its opinion for the discretion of the Council. CityCouncil v. Ahrens, 4 Strob., 241. Darlington v. Ward,
I think the judgment should be reversed and complaint dismissed.
A majority of the Court having concurred in this opinion, the judgment of the Circuit Court is reversed and complaint dismissed.
MESSRS. JUSTICES FRASER and MARION concur.
MR. ACTING ASSOCIATE JUSTICE B.A. MORGAN concurs in part.
MR. CHIEF JUSTICE GARY did not participate.
Dissenting Opinion
Action by the plaintiff, individually and as a citizen and taxpayer of the City of Florence, for the double purpose of compelling specific performance of an alleged contract with the City to lease to him the theatre auditorium, owned by the City, a part of the City Hall, and to enjoin the City from executing a lease thereof to another party, Schnibben Howard, whose bid at a lower figure has been accepted. The date of the commencement of the action is September 6, 1923, and on that day, upon the verified complaint, a temporary restraining order, with a rule to show cause, was issued by his Honor, Judge DeVore, returnable before his Honor, Judge Shipp, at *245 Florence, on September 14, 1923. By agreement of counsel the cause was heard on the merits, upon the complaint and exhibits, the return and answer, and a traverse to the return, at the Fall term, 1923, by his Honor, Judge Dennis, presiding Judge, who filed a decree dated January 12, 1924, holding that the plaintiff had failed to establish a contract for a lease with the City, and was not, therefore, entitled to a decree of specific performance, but that as a taxpayer he was entitled to relief against the action of the City Council, in accepting the lower bid submitted by Schnibben Howard, and issued an injunction accordingly. The plaintiff has appealed from so much of the decree as refused specific performance of the alleged contract, and the City Council has appealed from so much of it as awarded the injunction.
The facts underlying the controversy, as best we have been able to gather them from the record for appeal, appear to be as follows:
The City of Florence owns a City Hall, in which building is an opera house, which for many years has been leased by successive City Councils to private persons upon competitive bids, at steadily increasing rentals. In the year 1911, the plaintiff located at Florence for the purpose of operating a moving picture theatre, and acquired an unexpired lease of the opera house, which ended with that year. He then acquired a lease of it for three years, 1912 to 1914, inclusive, in his own name, at an annual rental of $900.00. The lease was renewed for three years and eight months, at an annual rental of $1,800. This lease expired in 1919, whereupon the opera house was leased to other parties, Schnibben Howard, for three years, upon competitive bids, at an annual rental of $3,150. This lease was renewed for three years and expires during this year, 1924. In the meantime the plaintiff established his business at another location. *246
In June, 1923, it appears that a renewal of the lease to Schnibben Howard, which was to expire in May, 1924, was under consideration by the Council; whereupon the plaintiff addressed a communication to the Mayor, dated June 22, 1923, protesting against the premature consideration of the matter and expressing his willingness, should it be gone into, to submit a proposition, and insisting that the matter should be conducted under sealed bids, as had invariably been the custom theretofore. Receiving no reply, he again wrote the Mayor on June 30th, to the same effect, and offered to pay an annual rental of $5,000 upon certain conditions. On July 12th, the Mayor answered the two letters of the plaintiff, stating that "at the next full meeting of the City Council I will present your proposition and advise you." On August 31st, a meeting of the City Council was held, attended by the plaintiff, one of the then lessees, Schnibben, and two others apparently interested. After a discussion of the matter the visitors retired, and the City Attorney, by direction of the Council, prepared and mailed to each one of the four a declaration, addressed, "To Whom It May Concern," that the City proposed to lease the opera house for a term of three years, beginning at the expiration of the unexpired lease in 1924, upon certain conditions, and advising that proposals would be received by the City Clerk September 5, 1923. Within the time stated the plaintiff submitted a proposition, under the terms of said declaration, to lease the opera house for a term of three years at $5,304 per annum, payable monthly. The next highest bid was submitted by Schnibben Howard, the then lessees, at $4,350.
On September 5th, the City Council met, and after a consideration of the two bids, decided to accept the bid of Schnibben Howard, at $4,350, claiming to have acted in their discretion for the best interests of the City, particularly in preventing a monopoly of the moving picture business by the plaintiff. *247
The plaintiff then instituted this action, as stated, for the double purpose: (1) As an individual, of obtaining a decree of specific performance of a contract of lease at $5,304; and (2) as a taxpayer, of enjoining the City Council from consummating the proposed lease to Schnibben Howard at $4,350.
(The foregoing is taken from the opinion of Mr. Justice Cothran.)
The City Council contends that it, at the request of the plaintiff, set out its proposal for the purpose of receiving counter propositions, and had never surrendered its right of exercising discretion, and, until accepted by it, no counter proposition, of whatever character, imposed upon it any legal obligation. There had been written and verbal communications between the parties, and interviews and conferences without results. The plaintiff was party to all these, but, apparently, was without satisfaction. To bring the matter to a head, and to have before him in concrete from Council's attitude, he himself framed and filed the following inquiries, which, it will be observed, covered all questions involved in the previous interviews, correspondence, etc.:
"Hon. W.M. Waters, Mayor of Florence, S.C. ___ Dear Mr. Waters: I would like for Council to decide the following questions before submitting a bid on the opera house, which will have bearing on the amount I will offer:
"I. Do you intend to consider my bid on the same basis with Mr. Schnibben's?
"II. Number of years theatre is to be leased for?
"III. What repairs do you intend to make on theatre and what upkeep will you require of lessee?
"IV. How is rent to be paid?
"V. Amount of bond and what kind will you require?
"These have got to be decided on, and I think it is better to have an understanding before than argument after.
"I am,
These were answered as follows:
"To Whom It May Concern: The City of Florence proposes to lease the opera house for a term of three years commencing upon the expiration of the present lease in 1924. The City will agree to repair the roof covering the said building and to replaster the same inside wherever it may be necessary and to cover the walls with two coats of paint. The City further agrees to put in repair the heating plant so as to furnish adequate heat. The City will further during the term of the lease keep the roof free from leaks and will also repair the foundation of the said building should the same become necessary. The lessee will be expected to make any other improvements which he may desire at his own expense and during the terms of his lease keep the building and its equipment in first class condition, paying for the cost of so doing himself. The lessee will be required to arrange bond with some approved surety company in the sum of five thousand dollars conditioned for the payment of the rent and performance of all other covenants assumed by his lease. He will also be required to pay the City license assessed for the privilege of operating the theatre.
"All persons who desire to submit proposals for the lease of the building upon the terms herebefore set forth are required to reduce their proposals to writing and file the same with the City Clerk and Treasurer by nine-thirty o'clock on Wednesday, September the fifth, 1923."
These questions and the answers effectually removed, so far as the making of a contract is concerned, all former negotiations from entering as a factor in what from that time on should follow. In other words, these framed the issue for determining the first ground upon which plaintiff rests his case. The plaintiff contends that his direct response to the communication of Council in filing the highest bid was an acceptance of a binding offer of Council, and made the enforceable contract between them. *249
A mere call for bids by a municipality and a submission of the most favorable bid thereunder does not of itself constitute a full and complete contract. Supporting his demand, as an individual, for specific performance, the contention of the plaintiff is that the call for bids submitted by the City Council, interpreted by its terms in connection with the attendant circumstances, and followed by his submission of the highest bid, amounted to an acceptance of his bid by the City Council, and constituted a contract, enforceable by the Court, for a lease of the opera house for three years at $5,304 per annum.
The general rule, applied to the matter of advertisements or calls for bids on certain work or disposal of property proposed by a municipal corporation, is that the simple call for bids, followed by a submission of the most favorable bid, does not of itself constitute a complete contract; that the bid is simply an offer which creates no enforceable right in the bidder until it has been accepted. Williston on Contracts, § 31. Spencer v. Harding, L.R. 5 C.P., 561. Kingston v.Petch, 10 Exch., 610. Topping v. Swords, 1 E.D. Smith (N.Y.), 609. State v. Lincoln Co.,
The plaintiff makes further contention that Council agreed to consider his bid on equal terms with others; that it did not reserve to itself the right to reject any bid, and, inasmuch as his was the highest bid, that created the obligation and formal acceptance was not required.
It is true that no right to reject any bid was reserved, neither was there any proposition to accept the highest bid. The proposal of Council did not even contain an answer to inquiry No. 1; consequently, no promise was held out to him nor action accrued in that regard. 2 Dillon, Municipal Corp. (5th Ed.), § 811. Colorado Co. v. Murphy, 78 F., 28; 23 C.C.A., 631; 37 L.R.A., 630.
From all that had gone before to which the plaintiff was the militant party, he knew, or should have known, that a contract with him was being avoided, and that he could not rely upon general principle being overturned by their conduct to such extent that an exception to the rule would be created and a contract would be made complete by estoppel. Even if that were true, and we were permitted to go behind the written proposition, we would not be able to find any act of Council that looked to the making of a contract with the plaintiff — but the reverse. The paper handed plaintiff was nothing but an answer to his questions, a statement of what Council was going to do, and was the equivalent to an inquiry, "Now, what do you propose to do?" The plaintiff responded with the filing of his bid. It has not been accepted, and nothing has transpired between the parties before nor since the bid was filed that would justify a variance of the general principle or work of estoppel.
As a taxpayer the plaintiff seeks to prevent the execution of a contract by the City Council with Schnibben Howard, upon the ground that an injustice, burden, and hardship would be visited upon the taxpayers of Florence; that Council was practically giving away to its favored ones a thousand dollars a year without proper return therefor, etc.
While on the first ground relied upon by plaintiff we did not feel that for the purpose of deciding that question we *251 could go behind the written statement already referred to, still, for the purpose of deciding this last question, we must take into account everything that transpired from the beginning.
While the personnel of Council had no doubt changed a number of times since 1911, still, beginning at that time, that body was for nearly ten years in contact with the plaintiff. There is nothing in the record that gives account of the general conduct of the parties, but it does disclose the fact that plaintiff was not solicited to resume similar former relations. Many good and valid reasons may exist, but they are not recorded for us. The Council, being the administrative agency for handling the business and property of the City of Florence, was compelled to lose sight of friendships or the lack of them and, in order to disregard the best offer for the use of the property that was to be let to others, must have some good and tangible reason for so doing. Council did not seek to know whether it could get an annual rental exceeding $2,700 or $3,600, and yet they admit that after the first communication from plaintiff they passed a resolution in which they expressed the intention of leasing the building to Schnibben Howard on terms and conditions to be worked out later; that Schnibben was told of this action by Council and on the strength of it placed an order for seats. Plaintiff charged that the terms and conditions referred to were a term of three years at an annual rental of $2,700 or $3,600, and the only body who knew whether or not that was true went down in the record as not having knowledge or information sufficient to form a belief as to the truth of the allegations. It also appears that ten or eleven months before the current lease would expire, Council was about to enter into a lease to begin ten or eleven months hence, on terms and conditions not then agreed upon, and not letting anybody know about it either. Council contends now that it contracted with Schnibben Howard, but the record does not disclose at what figure. The record contains *252
other instances which more than offset the reasons Council gives for its action, and these, added to those already pointed out, would indicate that the attitude of Council was arbitrary, unreasonable, and not an exercise of discretion, but the execution of a will to do that which it started out to do. 2 Dillon, Mun. Corp., § 811. Haesloop v. City Council ofCharleston,
For the reasons stated I think the order of Judge Dennis should be affirmed.
Dissenting Opinion
Action by the plaintiff, individually and as a citizen and taxpayer of the City of Florence, for the double purpose of compelling specific performance of an alleged contract with the City to lease to him the theatre auditorium, owned by the City, a part of the City Hall, and to enjoin the City from executing *236 a lease thereof to another party, Schnibben Howard, whose bid at a lower figure has been accepted. The date of the commencement of the action is September 6, 1923, and on that day, upon the verified complaint, a temporary restraining order, with a rule to show cause, was issued by his Honor, Judge DeVore, returnable before his Honor, Judge Shipp, at Florence, on September 14, 1923. By agreement of counsel the cause was heard on the merits, upon the complaint and exhibits, the return and answer, and a traverse to the return, at the fall term. 1923, by his Honor, Judge Dennis, presiding Judge, who filed a decree dated January 12, 1924, holding that the plaintiff had failed to establish a contract for a lease with the City, and was not, therefore, entitled to a decree of specific performance, but that as a taxpayer he was entitled to relief against the action of the City Council, in accepting the lower bid submitted by Schnibben Howard, and issued an injunction accordingly. The plaintiff has appealed from so much of the decree as refused specific performance of the alleged contract, and the City Council has appealed from so much of it as awarded the injunction.
The facts underlying the controversy, as best we have been able to gather them from the record for appeal, appear to be as follows:
The City of Florence owns a City Hall, in which building is an opera house, which for many years has been leased by successive City Councils to private persons upon competitive bids, at steadily increasing rentals. In the year 1911, the plaintiff located at Florence for the purpose of operating a moving picture theater, and acquired an unexpired lease of the opera house which ended with that year. He then acquired a lease of it for three years, 1912 to 1914, inclusive, in his own name, at an annual rental of $900. The lease was renewed for three years and eight months, at an annual rental of $1,800. This lease expired in 1919, whereupon the opera house was leased to other parties, Schnibben Howard, *237 for three years, upon competitive bids, at an annual rental of $3,150. This lease was renewed for three years and expires during this year, 1924. In the meantime the plaintiff established his business at another location.
In June, 1923, it appears that a renewal of the lease to Schnibben Howard, which was to expire in May, 1924, was under consideration by the council; whereupon the plaintiff addressed a communication to the mayor, dated June 22, 1923, protesting against the premature consideration of the matter and expressing his willingness, should it be gone into, to submit a proposition, and insisting that the matter should be conducted under sealed bids as had invariably been the custom theretofore. Receiving no reply, he again wrote the Mayor on June 30th, to the same effect, and offered to pay an annual rental of $5,000.00 upon certain conditions. On July 12th, the Mayor answered the two letters of the plaintiff, stating that "at the next full meeting of the City Council I will present your proposition and advise you." On August 31st, a meeting of the City Council was held, attended by the plaintiff, one of the then lessees, Schnibben, and two others apparently interested. After a discussion of the matter the visitors retired and the City Attorney, by direction of the Council, prepared and mailed to each one of the four a declaration, addressed, "To Whom It May Concern," that the City proposed to lease the opera house for a term of three years, beginning at the expiration of the unexpired lease in 1924, upon certain conditions, and advising that proposals would be received by the City Clerk September 5, 1923. Within the time stated the plaintiff submitted a proposition, under the terms of said declaration, to lease the opera house for a term of three years at $5,304 per annum, payable monthly. The next highest bid was submitted by Schnibben Howard, the then lessees, at $4,350.
On September 5th, the City Council met, and after consideration of the two bids, decided to accept the bid of *238 Schnibben Howard, at $4,350, claiming to have acted in their discretion for the best interests of the City, particularly in preventing a monopoly of the moving picture business by the plaintiff.
The plaintiff then instituted his action, as stated, for the double purpose: (1) As an individual, of obtaining a decree of specific performance of a contract of lease at $5,304; and (2) as a taxpayer, of enjoining the City Council from consummating the proposed lease to Schnibben Howard at $4,350.
Supporting his demand, as an individual, for specific performance, the contention of the plaintiff is that the call for bids submitted by the City Council, interpreted by its terms in connection with the attendant circumstances, and followed by his submission of the highest bid, amounted to an acceptance of his bid by the City Council, and constituted a contract, enforceable by the Court, for a lease of the opera house for three years at $5,304 per annum.
The general rule, applied to the matter of advertisements or calls for bids on certain work or disposal of property proposed by a municipal corporation, is that the simple call for bids, followed by a submission of the most favorable bid, does not of itself constitute a completed contract; that the bid is simply an offer which creates no enforceable right in the bidder until it has been accepted. Williston on Contracts, § 31. Spencer v. Harding, L.R. 5 C.P., 561. Kingstonv. Petch, 10 Exch., 610. Topping v. Swords, 1 E.D. Smith (N.Y.), 609. State v. Lincoln Co.,
But there cannot appear any sound reason why, notwithstanding the general rule, a municipality may not, by the broadness of the terms of the call, by the absence of a reservation of the right to reject any or all bids, by its conduct and promises to the bidders, by the attendant and connected circumstances, inducing confidence and action by the bidders, bind itself in advance to accept the most favorable bid and be estopped from relying upon the general rule.
Municipalities as well as individuals are bound to treat those with whom they deal with the utmost fairness and consideration. If, therefore, they have made representations, openly expressed or fairly implied, that on a certain day they propose to let a certain contract to the most favorable bidder, without reservation, and induce action in the confidence of such representations, the most favorable bidder, in all honesty and justice, acquires a right which cannot be denied except in the exercise of a duty of trust which the municipality owes to its citizens. In the absence of such considerations, which should be made plainly to appear, such as his insolvency, financial inability, bad character, or other valid reason, he will have performed his part of the engagement and is entitled to its fruits.
"If under valid advertisement no discretion is reserved to the municipal officers, then it only remains to perform the ministerial function of opening the bids, ascertaining the lowest and complying with formal requisites." 28 Cyc., 662.
In the case of Anderson v. Board,
"That binding obligations can originate in advertisements addressed to the general public may be assumed as settled law today. But the effect to be given to such an advertisement *240 as the basis of a contract depends entirely on the intent manifested by its terms. A public proposal of that nature may be so expressed as to need but an acceptance, or the performance of some act by a person otherwise undesignated, to constitute an enforceable legal agreement, while, on the other hand, the proposal may amount to nothing more than a suggestion to induce offers of a contract by others."
It has been held in numerous cases that a statute requiring municipal contracts to be let to the lowest bidder is for the benefit of the municipality, as a protection to the public, and not for the benefit of the bidder; and that the lowest bidder has no right of action, under such a provision, to recover profits which he might have made had his bid been accepted; nor can he enjoin a violation of such statute. 2 Dillon, Municipal Corp. (5th Ed.), § 811. ColoradoCompany v. Murphy, 78 F., 28; 23 C.C.A., 631; 37 L.R.A., 630. But this is a different proposition from that where the municipality has bound itself to accept the most favorable bid. In McNeil v. Boston Chamber of Commerce,
The question, then, in this and all similar cases, is whether or not in the call for bids, in connection with the attendant circumstances, the City Council intended to and did obligate itself to accept the most favorable bid for the contemplated lease. That such was their intention, and that it was so understood by all the parties concerned, we have not the shadow of a doubt.
For many years previously it had been the custom of the City Council to award the rental contracts upon competitive *241 bids. The plaintiff had been a tenant of the opera house from 1911 to 1919 at recurrent increased rentals. In 1919 the lease passed out of his hands, upon competitive bids, to Schnibben Howard, whose bid was only $150 per annum more than the plaintiff's. In June, 1923, the plaintiff learned of negotiations between the City Council and Schnibben Howard, looking to a renewal of the lease which was not due to expire until May, 1924, nearly a year from that date, and that it was proposed to fix the rental at either $2,700 or $3,600. The City Council admits in its answer that such negotiations were on foot, but denies information or knowledge sufficient to form a belief as to the proposed rental, a matter necessarily within their knowledge. The plaintiff protested against such premature renewal and insisted upon competitive bids as had been the custom, and by which he had been ousted in 1919. He received no answer to this protest and demand. Again he repeated his protest and demand for competitive bids, and expressed his willingness to pay $5,000 rental. He received from the Mayor the assurance that his proposition, which was mainly his demand for competitive bids, would be submitted to Council; at the meeting held on August 31st, attended by O'Dowd, Schnibben, and two other parties apparently interested, the Council decided, ostensibly if not actually yielding to the demand for competitive bids, to issue a call for bids upon a lease for three years. This call addressed, "To Whom It May Concern," was mailed to O'Dowd, Schnibben Howard, and to the two others, declaring that "the City of Florence proposes to lease the opera house for a term of three years commencing upon the expiration of the present lease in 1924." It set forth the conditions of the proposed lease, and fixed the time limit for submission of bids at September 5th, 9:30 a. m.
It is not a conclusive circumstance, but strongly persuasive of the intention of the City Council to award the contract to the highest bidder, that the call for bids contained no *242 reservation of the right to reject any or all bids; the fact that it was issued at the call of the plaintiff for competitive bids, coupled with the absence of such reservation, could only mean that they intended, and it was so understood, that the award was to be made to the most favorable bidder.
The only two bids submitted were those of O'Dowd at $5,304, and of Schnibben Howard at $4,350. It does not appear at what hour of the 5th the Council acted, but when the time for bids expired at 9:30 a. m. the bids were opened, and at some time that same day the Council awarded the lease to Schnibben Howard at the smaller rental of $4,350.
The return of the City Council alleges that the call for bids was only a statement of the conditions upon which the Council would consider an offer to lease the opera house. The call conveys no such impression, but declares, "the City of Florence proposes to lease the opera house for a period of three years," and directs "all concerned" to submit proposals for the lease by a certain time. Such interpretation is also inconsistent with the promptness with which they acted upon the bid of Schnibben Howard, the bids apparently causing slight hesitation in their consideration.
In reason and justice the plaintiff was entitled to know the ground upon which his more favorable bid was rejected. It does not appear that at the time the Council gave any at all. In their answer and return they urge no objection to his financial ability, to his character, or to his capacity to carry out his contract. They say that the rejection was in the exercise of their "discretion", a very elastic and undefined term. In the absence of any facts upon which the exercise of such discretion was based, the rejection was nothing less than the exercise of arbitrary power. They do specify that a lease of the opera house to the plaintiff would create a monopoly, and that their action was in the interest of the public who frequent such places of amusement. We fail to find in the record the slightest evidence of the apprehended evil. The Council in awarding the lease to O'Dowd would *243 not attempt to confer upon him the exclusive right to operate picture shows in the City of Florence; they could not do that; there is nothing to show that the plaintiff would continue his present place of business; and if he ran both places, there is nothing to prevent Schnibben Howard from doing what O'Dowd did when they secured the lease which he had been holding, locate elsewhere. There is nothing to show that the award to O'Dowd would prevent any other man from opening a picture show elsewhere. There is no possible ground for the apprehension that an award to O'Dowd would create a monopoly in the picture show business in the City of Florence, and, in our opinion, the alleged reason, manifestly an afterthought, is without the slightest support.
Mr. Dillon says (Volume 2, § 811):
"But in order to give the action of the board or officers any legal effect, they or it must exercise jurisdiction and make a determination based upon some facts. If the board, intrusted with the duty of awarding the contract, refuses to accept the lowest bid for work or supplies, there must be some facts tending to show that it is not that of a responsible bidder, or there must be at least some claim to that effect. An arbitrary determination by such a body to accept the highest bid, without any facts justifying it, cannot have the effect of a judicial determination and must be designated as a palpable violation of the law."
In 28 Cyc., 663, it is said:
"But under all circumstances the lowest bidder has the right to fair consideration and treatment; and an award of a contract to another by corruption, by collusion, or for any other than legal and just consideration, will be voidable at his option, and action will lie in his favor to enforce his contract."
It is a striking circumstance that, at the meeting of August 31st, the plaintiff, who had persistently demanded a letting upon competitive bids and had placed the Council in a position *244 where they could not renew Schnibben Howard's lease at $2,700 or $3,600, and doubtless thereby becamepersona non grata, declined to submit a bid at all, after competitive bids had been determined upon, until he was assured that his bid would be considered upon the same basis as Schnibben Howard's. Was it so considered? If his bid was to be rejected upon the ground that he was already operating a picture show at another location, that was a fact which the Council knew as well when they gave the assurance on August 31st, as they did on September 5th, when they rejected it on that ground, as they now claim that an award to him would create a monopoly. The assurance manifestly was not maintained.
It follows, therefore, that the plaintiff is entitled to a decree of specific performance requiring the City Council to enter into a contract with him in conformity with the calls for bids and his bid, and that the injunction should stand.
The judgment of this Court should be that the decree of the Circuit Court be modified, and that the cause be remanded to that Court for such further orders as may be necessary to carry into effect the conclusions herein announced.
