Schenck v. Burgess

Opinion by

Mr. Justice Fell,

No attempt was made to sustain the allegations of fraud in awarding the contracts, and at the final hearing of the case the only questions which arose under the original bill related to the validity of the contracts entered into by the borough for the erection of electric light works.

The ordinances which provided for the construction of the different parts of the works were all duly passed by the borough council, approved by the burgess, recorded in the ordinance book and advertised; but the plans and specifications referred to in the ordinances as “ attached hereto ” were not recorded or advertised. The ordinances provided for advertisements for sealed proposals, but they made no provision for the awarding of contracts. The bids were accepted and the contracts awarded by resolutions duly passed, approved by the burgess and entered upon the minutes, but not recorded in the ordinance book and not advertised. The objections to the validity of the contracts were based upon the ground that neither the plans and specifications attached to the ordinances nor the resolutions awarding the contracts were recorded in the ordinance book or advertised.' The learned judge found that the ordinances had not gone into effect for the reasons that the specifications had not been recorded and advertised, and that the resolutions .awarding the contracts, being legislative in their character-and not recorded and advertised, conferred no authority for making the contracts.

Neither the general borough Act of April 3, 1851, P. L. 322, under which the borough of Olyphant was incorporated, nor the Act of May 23, 1893, P. L. 113, requires anything but an “ enactment, regulation, ordinance or other general law ” to be recorded and advertised. The plans and specifications, although referred to in the ordinances, were not in terms made a part of them. The specifications at the time of the hearing were fully recorded, and an offer to show that the plans were of such á character that it was impossible to record or advertise them was overruled. Unless' for the purpose of notice to the public of the action of council the plans and specifications must be considered as essential parts of the ordinances, they do not come' within the requirements of either act. In some cases they may be so considered, but in this we think not. -If they had been referred to as on file in the office of the clerk, burgess or engineer of the borough, it could scarcely be contended that the acts applied to them. The publication of the minute details of construction contained in specifications would impose an unreasonable burden on boroughs and would serve no useful purpose; the publication of plans and models would often be utterly impracticable. Such plans and specifications should be carefully preserved in the proper office and open to the inspection of all persons concerned. This was done, and everyone interested had the means of information. In Glading v. Frick, 88 Pa. 460, it was held that the act of April 3, 1872, which provided that when a contract for the construction of a building was recorded within fifteen days of its execution the building should be liable to the contractor alone for the work done and materials furnished, was fully complied with by recording the contract without the specifications. It was said in the opinion in that case, in speaking of the specifications : “ A peculiar state of facts ought to exist to make the recording of auxiliary documents like these indispensable. It is possible'to conceive of specifications that would contain plans, drafts or models of a kind to render their transfer to the record impossible, or at least intolerably inconvenient. . . . The rule that annuls the effect of an unrecorded agreement, which forms part of a single transaction, has no room to operate in such a case as this.”

The word “ ordinances ” as used in either act includes a resolution providing for the construction of public works. “An ordinance is defined to be the enactment of a permanent rule of conduct or government, while a resolution is an order of council of a special or temporary character. This distinction, however, is not adhered to. A permanent regulation in a municipal government may be adopted by what is designated as a resolution, and if so intended will have the same force and effect as an ordinance if passed with the same formalities. What the borough cannot do by the latter it cannot do by the former.” Triekett’s Pennsylvania Borough Law, sec. 106. A resolution of council is but another name for an ordinance, and if it be a legislative act it is immaterial whether it be called a resolution or an ordinance: Sower v. Philadelphia, 35 Pa. 231; Kepner v. Commonwealth, 40 Pa. 130; Waln v. Philadelphia, 99 Pa. 330. A resolution renewing a loan was held in Kepner v. Commonwealth, supra, to require the approval of the mayor; and in Marshall v. Mayor of Allegheny, 59 Pa. 455, a resolution not published and recorded was held ineffectual to revoke a contract for grading and to authorize a new contract therefor. While legislation by borough councils may be by ordinance or resolution, the requirements which are essential to the validity of an ordinance must be observed in the passage, approval, recording and publication of resolutions where the action of councils is legislative.

But a direction that enactments, regulations, ordinances and other general laws shall be recorded and advertised does not apply to all acts of council. It does not include resolutions which are not in their nature legislative and which do not'take the place of ordinances. The learned judge says in his opinion: “ I find nothing in the law requiring resolutions accepting bids and awarding contracts to be recorded in the ordinance book and advertised, providing the authority to accept bids and award contracts has been properly conferred.” But he finds the resolutions invalid, for failure to record and advertise, because they were the only action of council conferring the authority, and were therefore legislative enactments. The prior ordinances providing for the erection of the works were three in number»By them it was “ enacted and ordained ” that buildings should be constructed, that an electric light plant should be purchased, that a steam plant to supply power for the manufacture of electricity should be purchased; and the secretary of the borough was directed to advertise for sealed proposals, and the burgess was directed to appoint, suitable persons to superintend the construction of the building and to inspect the machinery, etc. These were legislative acts providing for the construction of public works, and were the creation of the authority for that purpose. If the ordinances had authorized the burgess or some other officer or a committee of council to open the bids and award the contracts, nothing would have remained to have been done by council. The ordinances fixed in detail the terms of the contracts to be entered into, the kind and character of the work to be done, the time of completion, the penalty for non-fulfillment, and in fact everything except the price to be paid. What was left to be done was an executive or ministerial act, not a legislative one, and it was done by the whole body. It was to receive the bids and award the contracts — acts which could have been done by anyone to whom authority had been given by.ordinance. What necessity can there be.that council by ordinance should authorize itself to take the successive steps to carry into effect that which it had already enacted and ordained should be done? The awarding of a contract thus previously authorized could be done by resolution duly passed and approved by the burgess and entered upon the minutes. The prior ordinances were a full and complete authorization.

The only remaining objection to the contracts is based upon the ground that the increase of the debt was illegal. This'objection was not raised by the original bill, and we are of the opinion that the amendment was improperly allowed. The purpose of the bill was to have certain contracts for the erection of electric light works declared void. The bill called into question the good faith of council in awarding the contracts, and the regularity and legality of the ordinances upon which the contracts were based, but it did not question the right of the borough to issue bonds. The purpose of the amendment was to have the increase of the borough debt declared illegal, and thus to strike down the security of the bondholders. The application for leave to amend was made more than a year after the bill was filed. In the meantime an answer and a replication had been filed, the testimony had all been offered, the argument made, and the case had been fully heard and was awaiting decision. No opportunity was ever given to the borough or the bondholders to be heard on the allegations in the amendment.

The application for leave to amend was not made in accordance with the equity rules ; it was too late, and it introduced a new and independent cause of action. No affidavit was filed that the application was not made for the purpose of vexation or delay, or that the matter of the amendment could not with reasonable diligence have been sooner introduced into the bill, as required by Rule 10. The introduction of the amendment shifted the ground of action by introducing an entirety new question, the means by which the money was raised. The bill was to declare the contracts void because of alleged defects in the ordinances intended to authorize them. If the plaintiffs were .entitled to the relief sought, they could have obtained it under the original bill. The subject-matter of the amendment was not an integral part of the subject-matter of the bill. The validity of the contracts did not necessarily depend upon the validity of the bonds. Their invalidity was alleged upon entirely different grounds. The answer introduced, no new matter unknown to the plaintiffs when the bill was filed, and it cannot be said accurately that it introduced any new matter. The complaint of the bill was that the contracts had been fraudulently made and that the ordinances were defective. Every allegation of fraud and irregularity was denied by the answer. There was no attempt to prove fraud, and at the hearing the question was narrowed to the technical objections to the ordinances. The fact that a vote to increase the debt had been taken and an ordinance providing for the issue of bonds passed was set up in the answer' not as a separate ground of defense, but in reciting the proceedings by the borough council which had led up to the question at issue. The application for leave to amend was evidently an afterthought based upon a new ground of objection to the contracts suggested by the decision in Sener et al. v. Ephrata Borough, 176 Pa. 80, and the amendment was allowed at a time and in a manner which denied the appellants an opportunity to be heard.

The right of the plaintiffs, who as members of council participated in all the proceedings and by their votes approved all that was done, or of any one under the circumstances disclosed by the testimony, to object now to the validity of the bonds may well be doubted.

The decree is reversed and set aside. As there was ground for the objections to the contracts when the bill was filed, which were removed by the subsequent action of council in passing the ordinances and entering into new contracts, the costs should be divided equally between the plaintiffs and the borough of Olyphant. And it is so ordered.