Reid v. Smith

The circuit court of Sangamon county, on the complaint of James S. Reid, held invalid the act of July 26, 1939, entitled "An act regulating wages of laborers, mechanics and other workmen employed under contracts for public works," which became a law without the approval of the Governor. The court permanently enjoined the Director of Public Works and Buildings, the Auditor of Public Accounts and the State Treasurer from awarding a certain contract or from paying any money from the State treasury upon the performance of it. The issue was made by motion to strike and dismiss the complaint, which was overruled by the court, and, upon appellants electing to abide by their motion, a permanent injunction was issued against letting and awarding the said contract in compliance with the provisions of said law. The constitutionality of the act is involved.

The act in question, (Laws of 1939, page 568,) commonly called the Prevailing Wage law, provides that not less than the prevailing wage per diem, prevalent in the locality in which the work is to be performed shall be paid laborers, workmen and mechanics employed by or on behalf of the State, or on behalf of any county, city and county, city, town, township, district or other political subdivision of the State in the construction of public works; that the public body awarding such contract shall ascertain the prevailing wage in the locality and shall specify it in the call for bids, and it shall thereupon become mandatory upon the contractor to whom the contract is awarded to pay not less than the specified wage and so provide in his contract with the public body, and that the generally prevailing wage shall be the rate determined upon by the public body awarding the contract, whose decision on this matter shall be final. The law provides for a penalty of $10 per day for each laborer not receiving such wage, payable to the political body awarding such contract, and authorizes such penalties to be deducted from the contract price. There are other provisions relating to administrative matters unnecessary to determination of the issues involved herein.

The complaint alleges plaintiff was a resident of Illinois and had paid the motor fuel tax in accordance with the law; that part of such taxes had been apportioned to the Department of Public Works and Buildings, and that the latter was about to award a contract for the construction of a highway in Sangamon county, Illinois, and that the Director of Public Works and Buildings, in accordance with the act, had specified the prevailing wage to be paid and intended to award said contract and have the cost thereof paid from the motor fuel funds, in accordance with the provisions of said act, which are set out in full in the complaint; that said statute is unconstitutional, and that the prevailing wage ascertained and specified by the Director of Public Works and Buildings is from thirty cents to seventy-five cents per hour higher than workmen can reasonably be obtained to do the same work in the locality. The circuit court enjoined the enforcement of the law as being unconstitutional, without pointing out specific reasons.

One question presented in the present case is whether the State has the right to prescribe by law the payment of a wage — even though generally prevailing in the locality of the improvement — to be paid in the construction of public work, which is more than the contractor doing the work would pay if not required by law to put such prescribed wage into effect. If the law has such an effect may a taxpayer bring suit to enjoin officers of the State from enforcing it?

We have uniformly held that a taxpayer may maintain a suit in equity to enjoin the misappropriation or waste of public money. In Jones v. O'Connell, 266 Ill. 443, this court said: "If taxpayers have a right or interest which the bill in this case was intended to protect it is of a purely equitable nature, the legal right and title being in the State. * * * This court has always recognized that rule and has uniformly held that the taxpayers are in equity the owners of the property of a municipality, and whenever public officials threaten to pay out public funds for a purpose unauthorized by law or misappropriate such funds, equity will assume jurisdiction to prevent the unauthorized act or to redress the wrong, and this is because the right and interest are equitable in their nature and are not recognized by courts of law. Colton v. Hanchett,13 Ill. 615; Perry v. Kinnear, 42 id. 160; Beauchamp v. KankakeeCounty, 45 id. 274; Stevens v. St. Mary's Training School, 144 id. 336; Littler v. Jayne, 124 id. 123; Adams v. Brenan, 177 id. 194."

In Fergus v. Russel, 270 Ill. 304, and Greenfield v. Russel, 292 id. 392, the same principle was followed and applied to restrain the State Treasurer from paying certain illegal appropriations made by the legislature. In that case the proposition was advanced that no power existed to interfere with the legislative or executive branch of the government in so far as the acts complained of are a part of the sovereignty of the State, but was definitely rejected by the court. The plaintiff as a taxpayer had a right to maintain this suit.

Appellants argue there is no limitation on the right and power of the State to prescribe conditions under which it will make and execute contracts involving public works in which the State, or other agencies of the State, are interested; that in accordance with such right the State has fixed upon the generally prevailing wage as the minimum that may be paid in performing such a contract. Appellee claims the law is unconstitutional because it deprives the taxpayer of the benefit to be derived from the right of the employer and employee engaged in public work to freely contract on the question of wages and hours of work, and because the act delegates to certain administrative officers the arbitrary right to fix wages, without having any standards or rules set out in the law to guide or to restrain their discretion.

It must first be noted that the act does not, in itself, fix a definite wage, but provides that it be ascertained and fixed by the public body awarding the contract as representing respectively the State or each subdivision of the State. The question arises whether such officials may be delegated the power to fix wages. In People v. Federal Surety Co. 336 Ill. 472, this court said: "The rule stated in Sutherland on Statutory Construction, section 68, is as follows: ``The true distinction is between a delegation of power to make the law, which involves a discretion as to what the law shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no objection can be made.'" If the discretion rests wholly with such officials it is an unconstitutional delegation of power. People v. Federal Surety Co. supra.; Moy v. City ofChicago, 309 Ill. 242; People v. Belcastro, 356 id. 144; Winter v. Barrett, 352 id. 441; Schireson v. Walsh, 354 id. 40;Boshuizen v. Thompson and Taylor Co. 360 id. 160; City of Chicago v. Matthies, 320 id. 352.

Section 1 of the act in question requires laborers, workmen and mechanics to be paid "not less than the general prevailing rateper diem wages for work of a similar character in the locality;" section 2 that the "public body * * * shall ascertain the general prevailing rate per diem wages in the locality," etc. Section 4 defines the prevailing wage as "the rate determined upon as such rate by the public body awarding the contract or authorizing the work." No hearing is required to be had of such public body, and no means are specified by which the prevailing wage is to be ascertained, and no time or place of meeting, or any meeting is required of such body.

The use of the term prevailing wage assumes that in each community there is a uniform, well-established scale of wages paid workmen, laborers and mechanics, whereas as a matter of common knowledge the amount paid for given employments in most communities is neither uniform nor constant, depending upon varying local conditions. In commenting upon this term this court said, in Mayhew v. Nelson, 346 Ill. 331: "The difficulty of ascertaining the meaning of the phrase, ``the prevailing rate of wages' is apparent. Whether it means the rate which the most skillful, the average, the least capable or the most numerous group command, the act does not disclose." And further it was said: "The act not only prescribes no test or standard by which the prevailing rates of wages in a particular jurisdiction may be ascertained, but when an improvement extending from one subdivision of the State or municipality into or through another or dividing them is contemplated, no guide is offered by which the applicable rate or rates of wages may be determined."

The present law in declaring "the term ``general prevailing rateper diem wages' shall be the rate determined upon as such rate by the public body awarding the contract or authorizing the work" neither defines the term, nor furnishes a standard for ascertaining a wage.

The provision of section 2 of the act authorizing forfeitures or penalties to be retained and withheld from the contract price by the awarding body or the Department of Labor and power to render decisions in that regard, confers judicial power upon such bodies contrary to article 3 of the constitution. (Cleveland,Cincinnati, Chicago and St. Louis Railway Company v. People,212 Ill. 638; People v. Mallary, 195 id. 582.) The fact that an appeal is provided from the decision of the awarding body or Department of Labor in so declaring a forfeiture, does not justify one department of government exercising powers belonging to another. People v. Beekman Co. 347 Ill. 92; North v. Boardof Education, 313 id. 422.

Another ground urged by the appellee to invalidate the Prevailing Wage law is that it deprives the taxpayer of the benefit that might accrue by the exercise of the right of contract between the employer and employee engaged in the construction of public work. The right of liberty guaranteed by section 1 of article 2 of the constitution includes the right to make contracts as well with reference to the amount and duration of labor to be performed as concerning any other local matter.(People v. Chicago, Milwaukee and St. Paul Railway Co. 306 Ill. 486. ) The right to contract is both a liberty and a property right under the constitution. Frazer v. Shelton, 320 Ill. 253;Frorer v. People, 141 id. 171; Braceville Coal Co. v. People, 147 id. 66.

The law involved undoubtedly abridges the right of the contractor bidding on the construction work for the State or any subdivision of the State, but since it applies to all contractors and none is objecting, does the requirement of the law that the contractors adopt the prevailing wage fixed by the body awarding the contract so affect the expenditure of public money as to warrant interference by a taxpayer? Regardless of what the rule may be in other jurisdictions we have uniformly held that requirements which have the effect of materially increasing costs, or limiting those who might be employed in the construction of public works, are illegal. Thus, suits brought by taxpayers to enjoin a regulation made by a municipal corporation requiring the employment of union labor have been sustained.(Adams v. Brenan, supra; Holden v. City of Alton, 179 Ill. 318.) Judgments have always been entered in taxpayers' suits restraining requirement of a regulation demanding the use of the eight-hour day in performing work for a municipality. (Ritchie v.People, 155 Ill. 98; Fiske v. People, 188 id. 206; McChesney v.People, 200 id. 146; Glover v. People, 201 id. 545.) The judgment in each of these cases was predicated upon the proposition that the public was interested in the cost of public improvements and entitled to sue, even though the contractors whose rights of contract were abridged did not sue. In other words, if the attempted abridgement of contract affected the cost of public work, a taxpayer could complain even though its effect upon him was indirect.

In principle the above cases cannot be distinguished from the one before the court. If it is illegal to require an eight-hour day, where the parties are willing to contract differently, how can a requirement that a contractor pay eighty cents per hour for common labor when it can be procured for fifty cents per hour by contract be sustained? In Adams v. Brenan, supra, the court said: "The complainant, as a taxpayer, is a proper party to question the action of the board. The contract containing the illegal provision was entered into voluntarily by the contractor, in pursuance of his alternative propositions submitted to the board. There is injury to the taxpayer on account of the unlawful agreement, and he is not deprived of a remedy for his wrong because neither the contractor nor any excluded laborer has questioned the contract."

The claim of appellant of the unrestricted right of the State to prescribe the conditions under which a State will enter into a contract involving public works is based to a large extent upon the decisions of the Supreme Court of the United States and of the State of New York. They cite Atkin v. Kansas, 191 U.S. 207,48 L. ed. 148, Ellis v. United States, 206 id. 246,51 L. ed. 1047, and Heim v. McCall, 239 id. 175, 60 L. ed. 206, where such a power upon the part of the State was sustained, involving hours of labor and preference rights of citizens in employment on public works. The last case mentioned involved the law of New York, which we do not regard as controlling because, while the earlier decisions held such a law invalid, when later decisions upheld such a law there was in force a constitutional amendment in that State permitting such legislation. Other jurisdictions as well as Illinois have reached a different result. Ex parteKuback, 85 Cal. 274, 24 P. 737; Harlan v. Employers Ass'n, 159 Atl. (Md.) 267; Attorney General v. Detroit, 225 Mich. 631, 196 N.W. 391; Frame v. Felix, 167 Pa. 47, 31 A. 375; Bohn v. Salt LakeCity, 8 Pac. (2) (Utah) 591; Ritchie v. People, supra; McChesney v. People, supra; Fiske v. People, supra; Glover v. People,supra.

There can be no question but what some jurisdictions have adopted a different rule than that in Illinois, and counsel, with force and earnestness, have urged that we distinguish if not depart from our prior holdings on this question. To uphold the appellants in their contention, even by noticing distinctions, which we do not believe exist, would invite a reconsideration of matters long established as settled law.

The decree of the circuit court of Sangamon county, in holding the act under consideration void, is affirmed.

Decree affirmed.