Anders v. Philadelphia

Municipalities — Municipal contract — Conspiracy—Competitive bidding — A ccounting — E quity. 1. On a bill in equity by tax payers against a city, certain of its officers, and a municipal contractor, to declare a contract void because it was the product of an unlawful combination entered into with the view to prevent competitive bidding, and for an accounting from the contractor, the prayers of the bill cannot be granted where the court finds as a fact based on sufficient evidence, that there was no improper understanding among the bidders, and that the close approximation in the bids showed that there was competitive bidding in fact; and such prayers will be refused although the court finds as a fact that the contractor failed to comply strictly, or fully with the requirements of the contract, that this failure was known to the officers of the city, and that it was not expected or contemplated by such officers when the contract was awarded that there would be a strict and literal compliance by the successful bidder, whoever he might be, with all the requirements of the contract. The fact that there was such an understanding on the part of the city officers is not evidence of an unlawful combination to defeat competitive bidding. 2. The complainants in such a bill have no standing to demand an accounting of the contractor of moneys which he received for work which he had not done. Such an accounting can be required from him only by the city itself.

Appeal, No. 241, Jan. T., 1911, by plaintiffs from decree of C. P. No. 4, Phila. Co., Dec. T., 1910, No. 807, on bill in equity in case of Howard S. Anders et al. v. City of Philadelphia. John E. Reyburn, Mayor of the City of Philadelphia, John M. Walton, Controller of the City of Philadelphia, George R. Stearns, Director of the Department of Public Works of the City of Philadelphia, Wm. R. Benson, Chief of the Bureau of Highways of the City of Philadelphia, John Virdin, Chief of the Division of Street Cleaning of the Bureau of Highways of the City of Philadelphia and Edwin H. Yare. Bill in equity to declare a contract void and for an accounting. Willson, P. J., filed an opinion in which he found the facts and law as follows: FINDINGS OF FACT. a. The contract was entered into between the defendant Yare and the City on the 18th day of February, 1910. After due advertisement, it had been awarded to him on the 7th day of December, 1909. It called for work to be done from the first of January, 1910, until the end of the same year, and work was done under the contract from the date of its execution. Work was also done between January 1st and February 18th, which the defendants have treated as covered by the contract. b. In competition for the contract four bids were presented to the City in response to the advertisement asking for such bids. The bidders were Peoples Brothers, Mack Paving and Construction Company, David McMahon, and the defendant E. H. Yare. Vare, to whom the contract was awarded, was the lowest bidder. We are not able to find anything in the proofs which would warrant us in reaching a conclusion that these bids, or any of them, were collusive as between the bidders and Vare. c. The contract and specifications called for the doing of work which has been substantially detailed in the second section of the previous recital of the plaintiffs’ bill. It does not seem to us that there would be any advantage in a repetition of what is therein set forth. We are satisfied by the proofs, and we find that, in numerous respects, which we need not now detail, but which will be set forth more fully in our answers to the plaintiffs’ requests for findings of fact, the contractor Vare failed to comply strictly or fully with the requirements of the contract. And we further find that his failure fully to comply with the provisions of the contract must have been known, and, in point of fact,, was known to the officers of the City who had supervision over the work which the contractor had agreed to do. d. We further find, as a fair deduction from the proofs, and particularly from the previous experience of the City officers with the carrying out of contracts relative to the same subject-matter, that, at the time when bids for the work in question were asked for, and also at the time when the contract was awarded to Vare, it was not expected or contemplated by those officers that there would be a strict and literal compliance by the successful bidder, whoever he might be, with all the requirements of the contract. e. At the same time we are not able to find in the proofs sufficient reason for holding and finding that there was any real combination or conspiracy or collusion between the officers of the City and Vare, either in the awarding of the contract to him, or in the manner in which he carried out or was allowed to carry out the provisions of the contract. Upon this particular point, a crucial one in the case, we may be permitted to enlarge somewhat and to express our views with some elaboration. The whole subject of contracts for the cleaning of streets is attended with many inherent difficulties. This has been demonstrated in the history of this and other municipalities. There may be no impropriety in its being said that when, many years ago, the writer of this adjudication was connected with the Law Department of the City, questions arose and were brought before the courts involving the practical possibility and propriety of a strict interpretation and enforcement of various provisions in contracts for the cleaning of streets. The difficulties connected with such a severe standard of requirement then necessitated some laxity of construction, and any practical method of dealing with the subject matter is likely to make it necessary that a certain amount of flexibility and the exercise of a good honest judgment shall be permitted in the enforcement of contracts of the nature referred to. The object to be attained in the making of such contracts is, of course, the cleaning of the streets, and the doing of such other work as is incidentally connected therewith. That is the main end to be had in view, and officers of the City who supervise such work would naturally keep it in mind. Whether or not a form of contract for the work of cleaning streets could be devised which would enable the desired object to be attained without holding the contractor to the furnishing of any particular number of implements or of men or of day’s work, is a question thát we need not now discuss. When the contract contains specific provisions . such as are embraced in the contract now in question there can be no doubt thát it is the duty of the City officers to require a substantial performance of those provisions. We are far from holding that the contract obligations can be ignored or disregarded. The pertinence of what we have referred to, however, is this, that it is not unnatural thát municipal officers entrusted with the supervision of the cleaning of streets should look mainly to the ends to be accomplished, rather than to the particular means employed for the purpose of reaching those ends. It may and must be said also that, unless proofs before the court compel a conclusion that municipal officers entrusted with the supervision of the cleaning of the streets were influenced, not by the general purpose of obtaining clean streets, but by a desire to favor a contractor and relieve him of work which he was bound to do under his contract, then a court ought not to find such officers guilty of an improper and illegal confederation in the nature of a conspiracy. We find nothing in the circumstances connected with the awarding of the contract to Vare which would justify the thought that there was any collusion between the City’s officers and him in regard thereto. It was doubtless the fact that Vare had a plant or appliances whereby the work of street cleaning could be done, and that other bidders probably were not so well situated and therefore could not bid to the same advantage. It is also true that this disparity might have been overcome if the bids had been asked for at an earlier date than that at which, in point of fact, they were requested. At the same time, it should be said not only that other bids were made for the contract in question, notwithstanding the disadvantage of position, but that the time of the asking for bids had been for many years customary with the City authorities. Unless we should be disposed to put an unfavorable constuction on such a state of affairs merely for the sake of reaching a conclusion derogatory to the City’s officers, we would not be justified in adopting that construction. At the same time, it is proper for us to say that there seems to be no reason why, in all such cases, and in cases of a similar character, bids could not be asked for at a period of time when, to the advantage of the city as well as for the convenience of the bidders, all bidders would have an opportunity to bid intelligently and to equip themselves with the necessary appliances to carry out any contract which might be awarded to them. As to the performance of the contract by Vare after it was awarded to him, notwithstanding we have already found, as our conclusions from the proofs, that he failed substantially to comply with the provisions of his contract, in its details and particular obligations, yet we are unable to find sufficient ground to sustain the plaintiffs’ contention that this failure on his part was either the result-of a previous understanding or collusion with the officers of the city, or was permitted by reason of any such understanding or collusion. We by no means question the accuracy of the proposition that a conspiracy or combination of the nature referred to may properly be inferred from a series of significant acts or omissions which naturally and necessarily lead to the conclusion that the acts or omissions constituting or evidencing the violation of a contract were the result of an actual understanding and agreement between the contractor and those entrusted with the supervision of his work, that such acts or omissions should be allowed without objection and without abatement of compensation by reason of his failure to do work that ought to have been done. In every case where such a question arises, it becomes necessary for the tribunal hearing the case to exercise a candid and intelligent judgment as to whether the facts developed in the case warrant a conclusion that the alleged collusion existed. We have endeavored to apply such a judgment to the proofs in this case. Notwithstanding we are of the opinion that there were serious departures on the part of the contractor from a strict and full compliance with the specific provisions of his contract, and that these must have been known, and should have been the subject of proper treatment, by the City’s officers, we still are unable to find that these officers were in a guilty combination or conspiracy with the contractor. In this connection, it must be borne in mind that the question before us is not to be settled by any views which we may have as to the sufficiency of the work done by the contractor to keep the streets clean, or as to the full fidelity and efficiency of the officers of the City in supervising the work of the contractor, or as to the manner in which the contractor performed his work, or even as to whether or not, if he had strictly complied with the terms of his contract, he would have made or lost large sums of money. The simple and single questions now under consideration is whether or not the proofs in the case ought to lead us to the conclusion that there was an agreement or combination between the contractor and the supervising officers of the City whereby he should be favored and allowed to draw money under the contract without doing the work which would justify the payment to him of the money received by him. The affirmative of this question was assumed by the plaintiffs when they filed their bill, and it was incumbent upon them to establish it by sufficient proofs before we can properly be asked to sustain their position. f. We find it to be true, although the contract in question was awarded to Vare on the 7th of December, 1909, that he did not, in point of fact, receive or enter into the formal contract until the 18th day of February, 1910, and, therefore, that whatever work he did between January 1st and February 18th of that year was done without any formal or written contract having been entered into for the doing of such work. FINDINGS OF LAW. (а) In view of our findings of fact as they have been hereinbefore set forth, it requires but few words to state our conclusions as to what is the legal position of the parties, with reference to that portion of the plaintiffs’ case which claims that the contract in question was null and void because it was either entered into or carried out under collusion and fraudulent combination with the City’s officers. It having been our conclusion that no such collusion or combination existed, no legal question of that nature arises, and we, therefore, find that the plaintiffs’ bill cannot be sustained upon any such ground. (б) So far as the plaintiffs’ case is based upon a claim that the contractor, Vare, failed to comply with his contract to do the work called for by the specifications, and, therefore, that he is bound to account for and repay to the City the moneys which were received by him from the City for the work which he ought to have done under the contract, we deem it sufficient to gay that in our judgment the plaintiffs have no standing to require the contractor to render any such account. If it were within the power of taxpayers in all cases wherein it might be claimed that a contractor had failed to comply with the provisions of his contract, to come into court and cause the matter to be investigated, and, in case of default of performance, to require the contractor to render such an account as is called for in this case, the affairs of the City would be thrown into endless confusion, and the proper functions of the municipal officers would, to a large degree, be devolved upon and assumed by the courts. We regard the municipal authorities as the repository of all the power that is needed to deal with such questions, as a general rule. A gross violation of duty might be sufficient ground for impeachment or prosecution. However that may be, the supervision of work done under municipal contracts and the making of payments for work done under them, in the absence of fraud of a character which would justify the interference of a court of equity, must be left to those who by law are entrusted with the responsibility over those matters. (c) In determining whether the contractor had a right to demand payment for work done from January 1st to February 18th, 1910, we must follow the views which have been expressed by this Court in cases recently decided and, particularly, in the case of Bullitt v. Philadelphia, 19 Pa. D. R. 1091. We have held that it is essential to the making of á valid contract between the City and a contractor that not only must a previous appropriation of the moneys necessary to pay the contractor for the work to be done by him have been made, but, also, that the contract itself must have been executed according to the requirements of the Act of June 1, 1885, P. L. 37. In the case in hand, the second of these necessary elements was entirely wanting, until the 18th day of February, 1910. Therefore, all the work done by Yare before that date must be regarded as having been done in the absence of a contract. For that reason, he had no right to demand payment for such work from the City, as a matter of legal obligation. It appears from the proofs that the contractor has received from the City a payment which was intended by the officers through whom the payment was made to cover the work done by him during the period in which no formal contract existed. That payment, however, was unauthorized by law, and must be accounted for by the contractor in the final settlement for the work of the year under the terms of the contract. It does not seem to us that, in that regard, it makes any difference whether the obligation to pay the contractor was entire or severable. So far as the payment for work done between January 1st and February 18th is concerned, the contract finally executed has no relation to the payment, for that contract was not in existence during that period. There is, therefore, no force in the argument that the plaintiffs are estopped from objecting to that payment, on the ground that it was made upon the basis of a certificate from the Director of Public Works that the work was done and the money due. Any such certificate was given without authority and had no effect, under the provisions of the contract as it was executed; We must regard all payments made as applicable only to work done after the contract was entered into, viz., after February 18th, 1910. The defendants contend that we should not adopt this view because of laches or delay on the part of the plaintiffs in objecting to the payment made, but we do not regard the point as well taken. There is nothing in the proofs to show that the plaintiffs had any knowledge that Yare was doing work in the absence of a contract, and, therefore, no duty or obligation rested upon them to move promptly, if they desired to move at all. We do not regard the present case as ruled by our decision in the case of Sheppard v. Philadelphia, 17 Pa. D. R. 636. It follows, therefore, that in the decree which shall be made in the present case, it must be ordered that the amount paid to Vare for work done in the year 1910, prior to February 18th, shall be treated as having been paid for work lawfully done under the contract, that is, for work done after the date last mentioned. Complainants filed the following exceptions': “1. The learned Court erred in finding as follows: 'E. At the same time, we are not able to find in the proofs sufficient reason for holding and finding- that there was any real combination or conspiracy or collusion between the officers of the City and Vare, either in the awarding of the contract to him, or in the manner in which he carried out or was allowed to carry out the provisions of the contract.’ ” [1] 10. “The learned Court erred in its answer to the fifty-seventh request for findings of fact by the plaintiffs, which request and answer were as follows: '57. The contract in suit was the result of an unlawful combination between the contractor and the officers of the City to defeat the provisions of law relative to competitive bidding. Answer: We decline to affirm this request.’ ” [2] “17. The learned Court erred in its answer to the fourteenth request for findings of law by the plaintiffs, which request and answer were as follows: '14. The contract in suit is void because it was the result of an unlawful combination between the contractor and officers of the City, to defeat the statutes relative to competitive bidding. Answer: Declined.’ ” [3] “19. The learned Court erred in not restraining defendant City from making further payments to the defendant Vare, as prayed for in the second prayer of the bill.” Answer: Declined [4] “20. The learned Court erred in not requiring defendant Vare to account for the sums of money illegally received by him and to pay the same into the City treasury, as prayed for in the third prayer of the bill.” Answer: Declined. [5] Errors assigned were (1-5) in dismissing complainant’s exceptions as above.