Packard v. Hayes

This case arose out of the exercise by the Mayor and City Council of Baltimore of the powers conferred upon the corporation by the 14th section of the charter (Act of 1898 chapter 123), which provides that, "in contracting for any public work, or the purchase of any supplies or materials involving an expenditure of five hundred dollars or more for the city or by any of the city departments, sub-departments or municipal officers not embraced in a department, or special commissions or boards, unless otherwise provided for in this Article, proposals for the same shall be advertised for, in two or more daily newspapers published in Baltimore City, for not less than ten nor more than twenty days, and the contract for doing said work or furnishing said supplies or materials, shall be awarded by the board provided for in the next section of this article, and in the mode and manner as therein prescribed."

The next section (15) provides that "all bids made to the Mayor and City Council of Baltimore for supplies or work for any purpose whatever, unless otherwise provided * * * shall be opened by a board or a majority of them consisting of the Mayor and certain other designated officials of the city government, that this Board shall "award the contract to the lowest responsible bidder"; that the successful bidder "shall promptly execute a formal contract to be approved as to its form, terms and conditions by the City Solicitor" and "shall also execute and deliver to the Mayor a good and sufficient bond to be approved by the Mayor in double the amount of the contract price"; that "to all such bids there shall be attached a certified check of the bidder, and the bidder who has the contract awarded to him, and who fails to promptly and properly execute the required contract and bond shall forfeit said check"; and then prescribes certain conditions that are to attach to the giving of the check, by the successful bidder, the amount of the check, and that the checks of the unsuccessful bidders shall be returned to them after the awarding of the contract.

In pursuance of the provisions of the 14th section of the city charter, which has been recited, the Commissioner of Street Cleaning, the head of a sub-department of Public Safety advertised as follows:

"Sealed proposals will be received by the Board of Awards until 12 o'clock noon on the 14th day of November, 1900, for the collection and disposal of garbage, dead animals, ashes and miscellaneous refuse in the City of Baltimore, Maryland. Specifications and proposal blanks can be obtained from the office of the Commissioner of Street Cleaning. All bids for the collection of garbage and dead animals must be accompanied by a certified check for $10,000, payable to the Mayor and City Council of Baltimore. All bids for the collection and disposal of ashes and miscellaneous refuse must be accompanied by a certified check for $1,000, made payable to the Mayor and City Council of Baltimore. The Board of Awards reserves the right to reject any and all bids. Bids must be inclosed in sealed envelopes addressed `Proposals for the collection and disposal of garbage and dead animals' and `proposals for the collection and disposal of ashes and miscellaneous refuse' and directed to George N. Numsen, City Register."

This advertisement was made in pursuance of a purpose on the part of the Commissioner of Street Cleaning to substitute the contract system for the system which had prevailed in the City of Baltimore for the collection, removal and disposal of garbage, dead animals, ashes and miscellaneous refuse. The specifications, to which reference was made in the advertisement set out, contained the provisions that "each bidder must submit with his bid the scheme of garbage disposal which he proposes to establish, marked so as to correspond to the proposal which it is intended to accompany, and including such plan, specifications and other information as may be necessary to enable the said commissioner to determine the feasibility of it. Each such bidder must be able to insure the completion of the plant as proposed by him, in order that it may be ready for operation by June 1st, 1901. The scheme of disposal must be signed by the bidder or bidders, and such signature must correspond to that affixed to the proposal."

They then made full and particular regulations for the collection and removal of garbage, refuse, c., but contained nothing further in reference to the scheme or plant to be put in operation for the disposal or reduction thereof more specific than that "the contractor must establish and maintain without cost to the city of Baltimore, beyond price stated in his proposal, such scheme or schemes, with all such wharves, boats, cars, vehicles, buildings, furnaces, boilers, drivers, presses and other devices and apparatus as may be necessary to enable him or them to perform the work specified in his or their contract" and that "the capacity of any plant or scheme established by the contractor must be sufficient to allow any necessary repairs to be made without interfering with the work of disposal." Provision was made in the specifications for six different proposals, 1st, to collect and dispose of all garbage, dead animals and market refuse in the city of Baltimore * * for five years from June 1st, 1901; 2nd, to do the same for ten years from same date; 3rd, "to collect and dispose of all ashes and miscellaneous refuse in the city of Baltimore * * for five years from June 1st, 1901; 4th, to do the same for ten years from same date; 5th," to collect and dispose of all garbage, dead animals, market refuse, ashes and miscellaneous refuse in the city of Baltimore * * for five years; 6th, to do the same for ten years.

Bids were made as invited by the foregoing advertisement to the number of five as alleged by the appellant; and to the number of six as alleged by the appellees. As to which is correct in this particular is not material to the inquiry here. These bids were not opened on the 14th of November, 1900, the day indicated in the advertisement for proposals for the bids to be in; but further time was granted to the 21st of November upon the request of parties desiring to bid who represented that they were unable to procure copies of the specifications in time to enable them to prepare a bid by the time required in the advertisement. On the 21st of November, 1900, the bids were opened and it was found that in point of fact the lowest bid was that of Michael T. Horner who did not accompany his bid with a proposal for any sanitary scheme for disposal and reduction of garbage, c., but proposed to remove and dispose of it by depositing it and using it as a fertilizer on a farm belonging to him about eight miles from the city of Baltimore and upon neighboring farms equally distant; or "to reduce the said garbage by such methods of reduction, as is in accordance with most approved of practically successful scheme of reduction, and which shall be approved by the Commissioner of Street Cleaning of the city of Baltimore."

This bid seems not to have been considered. The record does not specifically state why. But the bids when they were opened were referred by the Board of Awards to the Commissioner of Street Cleaning for tabulation and report thereon, and the commissioner in his report states that the author of this bid "did not comply with the specifications in that he did not present any sanitary disposal scheme whatever as required by the specifications."

Other than Horner's bid, the lowest bid was one by the appellee, Samuel A. Rice, whose proposal was to collect and remove the garbage mentioned in specifications, "to a suitable place in or out of the city of Baltimore, and there reduce it by the method or process now in use for reducing garbage, at Syracuse, New York, or with such modifications of that method or process as shall from time to time, be approved by the Commissioner of Street Cleaning, or he will reduce the said garbage by the use of such other method or process of reduction as shall be mutually agreed upon by the contractor and the Commissioner of Street Cleaning." No plans of the system proposed to be used by this bidder were filed with the proposal. No bid was accepted on the 21st of November and three days later, on the 24th of November, 1900, the appellee, Rice, sent to the Commissioner of Street Cleaning a letter addressed to him and the Board of Awards jointly, accompanied with specifications as called for in the advertisement for proposals as respected the collecting and removing of garbage, c., for the purpose of making clerical corrections, as he explained, in the specifications which he had before handed in, and with these sent also plans and specifications of a system for the reduction of garbage, not of the Syracuse system which he had already proposed to use, but of the system in use in Detroit.

The full terms of other bids do not appear in the record, but this is not material. It is sufficient to say that it appears that each one proposed a different system for the reduction and disposal of garbage, except that one was a proposal to use the Syracuse system, or another system named in the bid. The foregoing appear in the record as undisputed facts, and upon this state of facts the contract for the removal and disposal of garbage was awarded to the appellee, Samuel A. Rice, according to the 6th proposal named in the specifications in the office of the Commissioner of Street Cleaning. Whereupon the plaintiff filed the bill of complaint which inaugurated this suit, on his own behalf as a taxpayer and on behalf of other taxpayers, praying for an injunction to restrain the carrying out of the contract upon the ground that the requirements of the charter, as expressed in the provisions therein which have been herein set out, were not observed in awarding the contract; and that the same was not awarded according to competitive bidding as therein contemplated. The appellees answered the bill and the case was heard below upon bill and answer by agreement of the parties. It was further agreed that the exhibits appearing in the record as filed by the plaintiff should be considered as having been filed with the bill "and as if established by proof."

It is from the bill, answers and exhibits that the facts which have been recited, and which are all that we need to be concerned with, are made to appear. This is not a case in which the Court has to deal with any question of fraud. It is simply a question of power possessed by the municipality concerned, as to the making of contracts of the character of the one here drawn in question. Now what is this power? It is defined in the two sections of the charter of the city of Baltimore, which have been set out. When "contracting for any public work or the purchase of any supplies or materials * * * proposals for the same shall be advertised for" by the city or any of its departments," and the contract for doing the said work or furnishing said supplies or materials, shall be awarded "by the Board of Awards as provided in section 15, and in the mode and manner as thereinprescribed." Here the Board of Awards in the action it is to take is expressly limited to the exercise of the power conferred upon it in section 15. In this section there is but a single power conferred upon it which is to open the bids and "award the contract to the lowest responsible bidder." It of course, must exercise a discretion as to the responsibility of the bidder. Beyond this the section will be searched in vain for any other or broader power than to declare the lowest bidder and award the contract to him.

This board is not given any power to make comparisons as to, nor to determine anything respecting materials offered or work proposed or the means of its execution; nor is there any authority vested in any other agency of the municipality to do this in connection with awarding contracts under the provisions of the two sections of the city charter in question after proposals have been made in response to advertisement for them for purposes named in these sections. There is no judgment authorized to be exercised in any way upon what is offered or proposed whether in the way of materials or of work after proposals made. The one single thing to be done is that the board, provided for in section 15, shall open the bids and declare who has offered to furnish the materials or do the work, as the case may be, for the lowest price, subject only to seeing that the bidder is responsible. Necessarily then all the essentials that the municipality designs that the contract proposed to be made shall contain, is to be determined before proposals are invited and are to be placed before the bidder as the basis of his bid. Otherwise there would be no standard by which bidding could be made with the definiteness and precision which would leave nothing to be done except to ascertain the lowest bid. And it may be said there could be no effective competition in bidding which it was the evident design of the provisions of the charter we are considing to secure.

That proposals for contracts under these provisions should be made by bidders with knowledge of and with reference to all the essential elements of the contract into which they are invited to enter is enforced by other considerations. How otherwise could the Board of awards perform its only other function in this connection, after declaring a party the lowest bidder and "award the contract" to him? This board has no concern with features, provisions or elements of the contract it is to award; and its award therefore must be of a contract the essential features, provisions and elements of which are already determined. It is also provided that when the Board of Awards has acted upon the bids the successful bidder must "promptly execute a formal contract to be approved as to its form, terms and conditions by the City Solicitor." Now the City Solicitor is not authorized to make the contract nor to add to or take from one that is proposed and accepted between the city and the bidder. He is only authorized to see that the contract made is put into form and formally executed. This has already been said in substance by this Court through JUDGE FOWLER in the case of The Amer. Lighting Co. v. McCuenet al., 92 Md. 703. It may be asked then, where is the City Solicitor to learn what the contract is that he is to see put into form except from what has been proposed by the city and agreed to be done by the bidder?

Having defined the power of the city under the sections of its charter which prescribe how contracts of the kind we are here dealing with shall be made, we are now to inquire whether in the case before us this power has been exercised within its limitations. We think it quite clear that it has not been so exercised. The contract the city proposed to make in this case when advertisement was made for proposals was intended to embrace or provide for not only the collection and removal of garbage,c., but a method or "scheme of garbage disposal." The "scheme" or plan of "disposal" was an important feature in the contract designed to be made and was evidently so regarded by the city authorities. As has been said what the contractor was to do with respect to the collection and removal of the garbage was set out in the specifications furnished by the city as the basis of his bid with care and particularity. The indefiniteness of the specifications in regard to the other branch of the proposed contract, the "disposal" of the garbage after its collection and removal, appears from the clauses thereof in that regard which have been set out or referred to. No scheme or method of disposal was indicated or described therein to be bid upon or contracted for, nor were any plans for operating or putting into effect such scheme or method as might be adopted. Bidders were instructed each for himself to present a "scheme of garbage disposal;" and as we have seen from the facts set out that is what was done by the bidders. When the bids came in it was found that each bidder had proposed a different scheme; some — alternative schemes with an indefinite offer to employ any other scheme or plan that might thereafter be agreed upon between the bidder and the Commissioner of Street Cleaning. That is to say no bid was made or could have been made with reference to any ascertained standard or upon any definite or precise basis.

It was also provided in the specifications that each bidder should include with the scheme of garbage disposal which he proposed to establish such plan, specifications and other information as might be necessary to enable the Commissioner of Street Cleaning "to determine the feasibility of it." This must mean that the scheme proposed by each bidder was to come under the judgment of the commissioner after the bids had been submitted and opened; and implies that a discretion was then to be exercised as to the adoption of the scheme according to the opinion the commissioner might form of its "feasibility." It does not appear how effect was to be given to this judgment of the commissioner when exercised; but it must have been intended that it was to have some influence or agency in the consummation of the contract. It is needless, however, to speculate as to the intent of the provision in question. The Commissioner of Street Cleaning has no such power in reference to contracts to be made under the law applicable in such a case as this, as was thus reserved to him in the specifications. After the bids have been submitted and opened the whole power as to awarding the contract is with the Board of Awards and we have seen what that power is.

The object of the provisions of the municipal charter we are considering is to prevent favoritism and extravagance in the making of municipal contracts. The effect of these provisions to produce the result intended would be greatly impaired, and the purpose of them might be entirely defeated if the method of awarding contracts under them which was pursued in this case could be sustained. The absence of any definite and precise basis for competition among the bidders; the allowing of each bidder to submit his own independent proposition as to what would form an important element of the contract; and the reservation of a discretion to be exercised by a municipal authority as to an essential of the contract after bids had been submitted, make the contract here the subject of controversy violative of the intent and purpose of the provisions of the law in question as well as of the essential character of competitive bidding.

We have reached our conclusions by giving to the sections of the charter of the city of Baltimore, which are the source of authority for the making of contracts of the kind we are passing upon in this case, such construction as we think reason required. There is no lack of pertinent authority going to support the views we have expressed. We may refer to two cases strongly analagous to the case at bar and in which the reasoning clearly illustrates our views and is convincing as to their soundness. These are Mazet v. City of Pittsburgh et al., 137 Pa. 548, and Fones Bros. Hardware Co. v. Erb, 54 Ark. 645. In the first of these it appears that an Act of Assembly had provided "that all work and material required by the city shall be performed and furnished under contract to be given to the lowest responsible bidder under such regulation as shall be prescribed by ordinance and it shall be the duty of Councils forthwith to enact such ordinances." An ordinance provided that "all contracts exceeding in value $50 shall be let or entered into only after proposals therefor shall have been inserted by advertisement in the official newspapers of the city for not less than five days;" and a subsequent one "that all contracts shall be awarded after due public notice upon such specifications as shall be approved by the Department of Awards." Under this law and the ordinances the city authorities advertised for bids for the paving of certain streets, among them a street called Craig street. No plans or specifications for paving this street, special to the street, were furnished except plans showing surface of the street, number of square feet to be paved and number of linear feet for curbing. Bidders were instructed by the Chief of Department of Public works to prepare their own specifications to be inclosed with their bids and he refused to furnish specifications. After advertisement and receiving of bids a contract was awarded for paving Craig street with asphalt — a material which had not been mentioned in the advertisement nor in any specifications for the work of paving. The contract was restrained and declared void on application to a Court of appropriate jurisdiction; and on appeal this action of the lower Court was approved. The Judge who spoke for the appellate tribunal said: "How can there be alowest bidder when parties proposing to bid are instructed to prepare their own specifications and submit them with their respective bids? The expression `lowest bidder' necessarily implies a common standard by which to measure the respective bids, and that common standard must necessarily be previously prepared specifications of the work to be done, and materials to be furnished, etc., specifications freely accessible to all who may desire to compete for the contract, and upon which alone their respective bids must be based."

In the next case above referred to, in which many authorities are cited and reviewed, it appears that the Constitution of the State of Arkansas contained this provision. "All contracts for erecting or repairing public buildings or bridges in any county or for materials therefor, or for providing for the care and keep of paupers where there are no almshouses shall be given to the lowest responsible bidder under such regulations as may be provided by law." An Act of the Legislature of the State authorized the "Board of Bridge Commissioners to advertise that they are ready to receive plans, specifications and bids for the erection of a county bridge from which they will adopt a plan and accept the accompanying bid." Attempted action under this law was resisted in the Courts and the law was held to be void, the appellate Court saying in respect to the constitutional provision, "it demands in the letting of contracts a basis upon which bids can be compared with mathematical precision and which leaves nothing to official discretion after bids are received." Other cases not so closely analogous to the case at bar but illustrative of the principle that there is required in the letting of contracts by competitive bidding a strict observance of limitations upon power are Ricketson v. City of Milwaukee, 47 L.R.A. 685; s.c., 105 Wis. 591; McIntyre et al. v. Perkinset al., 9 Philadelphia, 484, and the case in this Court ofMayor, c., v. Keyser et al., 72 Md. 106. Reference may also be had to Lawyer's Rep.Anno., vol. 26, page 707; Anderson v. Board of PublicSchools (notes) for cases there cited.

For the reasons given we are constrained to hold the action of The Board of Awards in awarding the contract in question to the appellee Samuel A. Rice to be ultra vires and void, and we think its execution should have been enjoined by the trial Court.

Holding the action of the Board of Awards to be ultra vires and void disposes of the defense made by the appellees that the contract awarded to Rice by this board had been ratified and confirmed by the whole city government. The contract was made with the city. The Board of Awards was the agency only through which it was made. Obviously the city corporation cannot attempt to do an act which is void and subsequently make the act valid by ratification. In the case of Mazet v. City of Pittsburgh, 137 Pa., supra, the contract which was there held invalid had been ratified and approved by Councils.

In the same case it was also held that the allegation of the want of good faith in the plaintiff in bringing the suit, the same as is made here, was immaterial in such case; that the plaintiff as taxpayer had a clear legal right to enforce; and the motives that actuated the bringing of the suit were immaterial. In the case of Mayor, c., v. Keyser et al., 72 Md. supra, this Court adopted the following language of the Judge (DENNIS, J.), who decided the case below where it was said the complainants (taxpayers) "have a right to require that the money they have contributed for the public benefit, shall be spent only for the purposes, and in the manner authorized by law, and that every security designed to protect its proper expenditure shall be faithfully observed. This right is a vital one to them and they are required to allege no other injury than that it is about to be violated. They will be injured, if the violation is permitted, by the act of violation alone." If then where a municipal corporation is proceeding to make a contract which it has no power to make as was being done in the case jus referred to, and as we find has been done in this case which contract will involve the expenditure of the money of the taxpayer such taxpayer sustains, by that act, an injury which gives him a clear legal right to redress, it is not perceived how, when he seeks that redress, his motive can take away his right. As we have seen, it was held in the case of Mazet v.Pittsburgh, supra, that the motive alleged could not be allowed that effect.

It follows that the decree of the Court below must be reversed and the cause will be remanded that proceedings may be had in that Court in conformity to the opinion of this Court.

Decree reversed and case remanded with costs to theappellant.

(Decided January 15th, 1902.)