O'Dowd v. Waters, Mayor

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 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.

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.

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,

"Yours very truly, "[Signed] J.M. O'DOWD."

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.

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., 35 Neb. 346;53 N.W. 147. State v. Dixon County, 24 Neb. 106; 37 N.W., 936.Anderson v. Board, 122 Mo., 61; 27 S.W. 610; 26 L.R.A., 707 and note. McNeil v. Boston Chamber of Commerce,154 Mass. 277; 28 N.E., 245; 13 L.R.A., 559. Ervingv. Mayor, 131 N.Y., 133; 29 N.E., 1101. Wilie v. Price, 5 Rich. Eq., 91. Howard v. School, 78 Me., 230; 3 A., 657.Leskie v. Haseltine, 155 Pa., 98; 25 A., 886. Price v.Fargo, 24 N.D., 440; 139 N.W., 1054. Elliot v. Minneapolis,59 Minn., 111; 60 N.W., 1081. Gantenbein v.Pasco, 71 Wn., 635; 129 P., 374. Meader v. Zanello,109 Or., 562; 220 P., 115. Bromley v. McHugh,122 Wn., 361; 210 P., 809. Under such circumstances, they are only proposals, and in order to constitute an enforceable obligation the bid must be accepted. Anderson v. Board,122 Mo., 61; 27 S.W. 610; 26 L.R.A., 707.

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 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 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, 123 S.C. 272; 115 S.E., 596.

For the reasons stated I think the order of Judge Dennis should be affirmed.