Opinion ID: 1828112
Heading Depth: 1
Heading Rank: 1

Heading: illegal acts

Text: The taxpayers contend that the trial court erred in not finding that the architect was illegally retained. It is their contention: (1) that the commissioners had agreed to pay a sum for his services in excess of the limitation of five per cent, as provided by Section 11-11-32, N.D.C.C.; (2) that there are no minutes of record which show that the architect was engaged, which is in violation of Section 11-11-35, N.D.C.C.; (3) that no written contract has been entered into with the architect, as required by Section 11-11-29, N.D.C.C.; and (4) that there was no appropriation contained in the budget for payment of the architect's fees, as required by Section 11-23-06, N.D.C.C. It is the taxpayers' contention that the architect's employment is an integral part of the county shop project and that because of these illegal acts the entire project is illegal and ineffective. Succinctly stated the statutes cited above provide: When a county building is to be erected    the board of county commissioners may engage a competent architect to prepare plans, specifications, and details. He shall not be paid more than five per cent of the total cost of the building. Section 11-11-32, N.D.C.C. The board of county commissioners shall keep a book in which all orders and decisions made by it shall be recorded. Such book shall be known as `a record of the proceedings of the board of county commissioners.'    Section 11-11-35, N.D.C.C. A contract shall be entered into under the provisions of this chapter only after it has been approved by the vote of a majority of the members of the board of county commissioners. The contract shall be made in writing    Section 11-11-29, N.D.C.C. No county expenditure shall be made or liability incurred, nor shall a bill be paid for any purpose, in excess of the appropriation therefor    Section 11-23-06, N.D.C.C. (There are certain exceptions not applicable here.) It appears from the record made at the trial that the matter of hiring the architect was loosely handled. However, the testimony on behalf of the commissioners and the architect is to the effect that it is the intent of both parties to comply with the requirements of the law with respect to the architect's fees, which have not been paid to date. The taxpayers introduced evidence of previous architectural services to establish that it has been the practice of the commissioners to pay architects as much as ten per cent of the cost of the project. The architect engaged in this case testified that he intended to charge the commissioners five per cent for preparation of the plans, specifications and details and that if the commissioners wished to engage him to supervise and inspect the work there would be an additional charge of one per cent of the cost of the building. In construing Section 11-11-32, N.D.C.C., quoted above, we are of the opinion that it restricts and limits only the amount that may be paid by the commissioners to an architect to five per cent for the preparation of plans, specifications and details. The intent of the statute to limit the payment in this manner is clarified by the application of the relevant sections contained in Chapter 48-02, N.D. C.C. Chapter 11-11, N.D.C.C., provides for the general powers and duties of the board of county commissioners, whereas  Chapter 48-02, N.D.C.C., is a special chapter governing the altering, repairing, or constructing of any building belonging or appertaining to any of the public institutions of the state, or to any county, city, park district, school district, or other political subdivision of the state where the estimated cost amounts to more than $25,000. Chapter 11-11, N.D.C.C., was enacted under Chapter 21 of the Session Laws of 1877; Chapter 48-02, N.D.C.C., was enacted under Chapter 235 of the Session Laws of 1911. Section 1-02-07, N.D.C.C., provides as follows: Whenever a general provision in a statute shall be in conflict with a special provision in the same or in another statute, the two shall be construed, if possible, so that effect may be given to both provisions, but if the conflict between the two provisions is irreconcilable the special provision shall prevail and shall be construed as an exception to the general provision, unless the general provision shall be enacted later and it shall be the manifest legislative intent that such general provision shall prevail. To the extent that the provisions of Chapter 48-02, N.D.C.C., conflict with those of Chapter 11-11, N.D.C.C., the former must prevail and we so hold. Where an enactment treats of a phase of a prior and more general law with which it conflicts the subsequent law governs and the former general law is repealed to the extent of the conflict. State ex rel. Public Service Comm. v. Montana-Dakota Utilities Co., 89 N.W.2d 94 (N.D.1958). The pertinent provisions of the relevant statutes with regard to the architect's fees contained in this chapter are as follows:    In all cases where the estimated cost of such work exceeds twenty-five thousand dollars, such plans, drawings, and specifications shall be procured from a licensed architect    Section 48-02-02, N.D.C.C. At least once in each calendar month during the continuance of work upon any public building or erection begun and carried on under the provisions of this chapter, the governing board, or a committee thereof duly authorized by the board for that purpose, shall meet and receive and consider estimates furnished by the supervising architect or the superintendent of construction of such building or erection    If no supervising architect and no superintendent of construction is employed upon such contract, the contractor, at the end of each calendar month during the continuance of work under any such contract, may furnish to such board or public body in charge of such work like estimates which shall be allowed in like manner.   Section 48-02-07, N.D.C.C. The governing board shall employ the architect furnishing the plans as provided in this chapter, or some other suitable person, who shall be a practical mechanic and builder with four years experience, as superintendent of construction of the work for which the plans and specifications are prepared, as provided by section 48-02-02. He shall have personal charge and supervision of the contractor on the work under the direction of the architect and the governing board employing him. He shall see that such contractor performs his work in compliance with the plans and specifications adopted by such board. The architect or any other person, acting as such superintendent, shall receive a reasonable compensation to be fixed by such board.    Section 48-02-13, N.D.C.C. There is no provision in Chapter 48-02, N.D.C.C., which sets the amount the architect may receive for preparing plans, drawings, and specifications. Therefore there is no conflict with Section 11-11-32, N.D.C.C., in that regard. The five per cent limitation of Section 11-11-32, N.D.C.C., also applies to the compensation which the architect may receive for work done under Section 48-02-02, N.D.C.C. However there is a conflict between this five per cent limitation and the provisions of Sections 48-02-07  and 48-02-13, N.D.C.C. These sections provide that the architect employed under Section 48-02-02, N.D.C.C., may also be employed to perform additional duties, and Section 48-02-13, N.D.C.C., specifically states that he shall receive a reasonable compensation for his work. Therefore the five per cent limitation which is contained in Section 11-11-32, N.D.C.C., pertains to Section 48-02-02, N.D.C.C., but does not apply to Sections 48-02-07 and 48-02-13, N.D.C.C., and, therefore, the architect may receive additional compensation for supervising the work. Both parties testified that they intended to comply with the law with respect to the compensation to be paid and, therefore, we find that an illegal act has not occurred here. The record made in this trial does not disclose the recording of any resolution or minutes relative to the engaging of an architect and it appears that Section 11-11-35, N.D.C.C., quoted above, was violated; however, it does appear from the record that the architect prepared plans, specifications and details and furnished them to the commissioners, who accepted and approved them. An excerpt from the proceedings of the commissioners of a meeting held October 19, 1971, admitted in evidence at the trial, reads as follows: On motion by Mr. Kinney, seconded by Mr. Cummings, the Auditor was instructed to advertise for bids for the construction of a County Shop Building as per plans and specifications prepared by Grosz and Anderson Architects, Grand Forks, North Dakota, bids to be opened at 11:00 o'clock A.M., C.S.T., November 16, 1971. The architectural firm referred to in these minutes is the same as that referred to in the taxpayers' claim that the architect was illegally engaged. It is clear from the excerpt of the minutes referred to and the evidence adduced at the trial that the architect did prepare plans, specifications and details which were furnished to and accepted by the commissioners. Additional evidence establishes that a call for bids was advertised, bids were received and, pursuant to excerpts from the minutes of the commissioners of November 16, 1971, bids for the construction of the county shop building were accepted. It also appears that no written contract was entered into between the architect and the commissioners and that there was no line item appropriation for architect's fees. A public corporation, however, may not escape liability for the reasonable value of the plans and specifications obtained and retained by it through transactions coming within the general powers of the commissioners even though the proceedings of the commissioners were defective. Thus the County will be required to pay the reasonable value of the plans and specifications received when equity and good conscience require payment. In Backhaus v. Lee, 49 N.D. 821, 194 N. W. 887 (1923), it was held that an injunction will not lie at the suit of taxpayers to enjoin the county commissioners from paying for culverts and bridges purchased through procedurally defective transactions which include the failure to advertise for bids for the length of time required by statute. The court points out that the material was furnished in good faith, that it was necessary, and that the county received full value. It then reached the conclusion that the equitable powers of the court could not be invoked to aid the accomplishment of a purpose manifestly inequitable, and denied the injunction. Backhaus governs in this case. It has been cited with approval in subsequent cases. Merchants Nat. Bank & Trust Co. v. City of Grand Forks, 130 N.W.2d 212 (N.D.1964); Northwestern Sheet & Iron Works v. Sioux County, 76 N.D. 451, 36 N.W.2d 605 (1949); Stark County v. Dickinson, 56 N.D. 371, 217 N. W. 525 (1928).  For these reasons we find that the trial court did not err in failing to grant the injunction on this ground. The next illegal act complained of pertains to the publication of the notice for bids. The taxpayers claim that the notice for bids did not comply with the statutes inasmuch as the notice provided for a 26-day period of time between the first publication of the advertisement for bids and the day set for the opening of bids, instead of a period of thirty days as required by Section 11-11-26, N.D.C.C. The taxpayers cite in support of their contention Section 11-11-26, N.D.C.C., which was last amended by Chapter 109 of the Session Laws of 1957. It requires that when the amount to be paid by a county for the erection of county buildings, for the purchase of fuel, or for election ballots and supplies exceeds $1,000 the board of county commissioners shall cause an advertisement for bids to be published at least once each week for two successive weeks, and that the first publication shall be made at least thirty days prior to the day set for the opening of bids. In support of their contention that they have complied with the law the commissioners cite Sections 48-02-02 and 48-02-03, N.D.C.C. These sections were last amended by Chapter 454 of the Session Laws of 1971. They provide that in all cases where the estimated cost of constructing a new building by a county exceeds $25,000, it shall advertise for bids for the doing of the work, which advertisement shall be published for three successive weeks, the first publication thereof to be at least twenty-one days prior to the date of the opening of bids. Thus there appears to be a conflict in the law with respect to the time to be allowed before the opening of bids for the construction of a building by a county, costing in excess of $25,000. As discussed previously, the provisions of Chapter 48-02, N.D.C.C., must prevail. Inasmuch as at least twenty-one days passed after the first publication of the notice for bids we hold that there is no error here. Next the taxpayers specify as further illegal acts: (1) that the commissioners did did not adopt a resolution authorizing entry into a written contract with a successful bidder as is mandatory under Section 11-11-29, N.D.C.C.; (2) that no contract for the construction has been executed by the commissioners; (3) that the written contract submitted by the successful bidder, Eickhof Construction, Inc., is illegal inasmuch as it does not specifically provide that not more than seventy per cent of the contract price shall be paid until the contract is executed and completed to the satisfaction and acceptance of the Board, which is in violation of Section 11-11-29, N.D.C.C.; and (4) that in the event this court should determine that Chapter 48-01, N.D.C.C., is applicable the commissioners have not certified, as required by Section 48-01-02, N.D.C.C., to the contractor's surety company that the contract to be awarded has been developed, advertised, and bid in accordance with all the provisions of chapter 48-02 relative to such construction. The record reflects that on November 16, 1971, the commissioners accepted bids. An excerpt of the minutes reads as follows: On motion by Mr. Kinney, seconded by Mr. Cheatham, the Board accepted the base bid of Eickhof Construction Company for the Grand Forks County Shop Building of $155,300 for the General Construction of Schedule A; the base bid of Air Control Heating, Inc. of $37,357. for the plumbing and heating of Schedule A; and the base bid of G-M Electric Company of $19,272.00 for electrical work of schedule A, all members voting Aye. Subsequently Eickhof Construction Company prepared and executed a proposed form of contract which was submitted to the commissioners, but before any action was taken by them this suit was instituted. A temporary restraining order was served upon the commissioners on November 24,  1971, thus preventing them from taking any further action. The matter has been in a state of limbo since then except for a short period of time when the restraining order was dissolved by the trial court and, upon application of the taxpayers, was reinstated at the direction of this court in order to maintain the status quo pending appeal. According to the brief of the commissioners on this appeal, during the period when the temporary restraining order was not in effect, the contract was modified to comply with the statutes cited by the taxpayers and was executed and completed by the commissioners. However, this incident, if it be a fact, is not a part of the record before us for review. We see no merit in the arguments of the taxpayers inasmuch as the illegal acts complained of had not been committed, and we cannot speculate that they would have been committed had not the taxpayers commenced this action and obtained a temporary restraining order. Finally, the taxpayers complain that the commissioners could not pay for the county shop building out of the revenues of the County for the current year as required by statute and, therefore, proceeded illegally inasmuch as they did not submit such extraordinary outlay of money to a vote of the electors. They rely on the following statutes, which provide: The board of county commissioners may provide for the purchase, erection, repair, and maintenance of the courthouse, hospitals, jails, and other necessary buildings within and for the county. It may purchase the sites for such county buildings if necessary and may make contracts on behalf of the county for the building, repairing, and maintaining thereof if the expenditures therefor are not greater than can be paid out of the revenue of the county for the current year. The board shall have the entire supervision of the construction of such buildings. Section 11-11-16, N.D.C.C. [Emphasis added.] The board of county commissioners shall submit to the electors of the county at any regular or special election any proposal for an extraordinary outlay of money by the county when the proposed expenditure is greater in amount than can be provided for by the annual tax levies. If the board considers the courthouse, jail, or other public buildings of the county inadequate for the needs of the county or deems it necessary to build a county hospital, and if it is thought that it is not for the best interests of the county to issue bonds to aid in the construction of such buildings or that the construction of such buildings by any other procedure is not for the best interests of the county, it shall submit to the electors of the county, at any regular or special election, the proposal for the construction of a courthouse, jail, or other public building by establishing a building fund to aid in the construction thereof. Section 11-11-18, N.D.C.C. [Emphasis added.] The commissioners contend that the expenditure of $211,929, being the total of the bids for the construction of the county shop building, plus the architect's fee, does not involve an expenditure of an amount greater than could be paid out of the revenue of the county for the year 1971. The evidence establishes that the commissioners appropriated $120,000 for the construction of a county shop building in their 1971 budget. This item was set forth in the budget, which was proposed, advertised and adopted under the heading of ROAD AND BRIDGE as a special line item entitled New County Equipment Shop Building $120,000. As credits to the budget estimate are two items, which testimony reveals were moneys received from sources other than taxes, that were earmarked to defray the cost of a new county shop building. They are set forth in the following manner: Pillsbury for purchase of County Addition $81,500.00 and Urban Renewal for purchase of County Shop $28,500.00. These items of credit were explained as follows: The Pillsbury for purchase of  County Addition consists of money received from the sale of other land owned by the County which had originally been acquired for county shop purposes, and Urban Renewal for purchase of County Shop was money anticipated to be received from the Urban Renewal Agency for the old county shop building. These two credits total $110,000. There was an appropriation of $120,000. Therefore it appears that there was to be a $10,000 tax levy for the construction of a county shop building. It developed, however, that the estimated appropriation of $120,000 was not sufficient to cover the cost of the new county shop building which, according to the bids received, totals $211,929, plus architect's fees. When the commissioners finally settled with the Urban Renewal Agency, which acquired the old county shop building, the County received a sum less than was estimated in the budget. The sum actually received was $25,850. Thus the money actually available in the Road Fund which was earmarked for the construction of a county shop building was $107,350 rather than the estimated appropriation of $120,000. If we add six per cent for architect's fees to the actual construction cost of $211,929, the total cost of the project will be $224,645. This leaves an unappropriated balance of $117,295. It is the contention of the commissioners that this balance may be paid out of revenues of the County for the current year without relying on an additional tax levy. The commissioners point to certain funds which contain surpluses from which transfers may be made to pay this additional amount. The commissioners contend that there is an unencumbered balance of $21,000 in the Capital Improvement Fund; an unencumbered balance of $32,231 in the Federal Disaster Fund; and a commitment from the Water Management Board for the payment of $8,000, $4,000 of which would be paid in 1971, for office space in the new county shop building. These transfers, if made, will total $57,231, leaving an unappropriated balance of $60,064. They then point out that the Emergency Fund, as of the day of the letting of bids, to wit, November 16, 1971, contained $100,749.72, which may be utilized to pay the balance. The taxpayers challenge the availability of all the above amounts. The $4,000 payment from the Water Management Board will not be considered here; the amount involved is insignificant in relation to the other funds and whether or not it is available would not affect the question of the sufficiency of funds to pay the balance of the cost of the county shop building. According to the evidence the Capital Improvement Fund contains $21,000 which is the unexpended balance of a special fund set up for the purpose of courthouse improvement and repair. All claims against this fund have been paid, the purpose for which it was created has been completed, and there remains no further use for the balance for the purpose for which the fund was created. Section 11-11-33, N. D.C.C., provides: Whenever there remains in the treasury of a county an unexpended balance of a special fund and all claims against the fund have been paid, and the purpose for which it was created has been subserved fully, and there remains no further use for the balance for the purpose for which the fund was created, the board of county commissioners may transfer the balance to any other fund of the county or to the subdivision to which the balance belongs. Therefore the balance in this fund can be made available for the purpose of paying a portion of the construction cost of the new county shop building. It appears that the fund termed Federal Disaster Fund has not been received by the County. The decision for its potential use by the commissioners is based on a letter from the Natural Disaster Representative of the North Dakota Civil Defense,  dated October 18, 1971, addressed to the County Engineer of Grand Forks County, stating that this sum had been approved by the regional director for payment to the County. It is explained that its purpose is to reimburse the County for work done by the County in the repair of flood damage to roads in the spring of 1971. The evidence is unsatisfactory as to this item and, on the basis of the record, we cannot judge whether these moneys, when and if received, can be made available to defray the construction cost of the new county shop building. Therefore, under the circumstances, we cannot pass on this question. However, if the federal disaster moneys are not available there are moneys available in the Emergency Fund, the balance of which is not disputed. There are also other funds which the commissioners have stated they intend to use, which are being challenged. We will first consider these challenges and then make a determination as to the availability of the Emergency Fund to defray the balance. The taxpayers insist that the Pillsbury Fund in the amount of $81,500 and the Urban Renewal Fund in the amount of $25,850 are not available for the purpose of constructing a new county shop building because these funds were covered into the Road Fund by the commissioners and, therefore, can be expended only for road machinery and for grading, ditching and surfacing of roads and highways. They refer us to Sections 24-05-01 and 24-05-02, N.D. C.C. These sections read as follows: In each county of this state having a population of two thousand or more according to the latest United States or state census, there shall be levied and collected a property tax of not less than one-fourth of one mill, nor more than the maximum rate permitted by law, on each dollar of the assessed valuation of all taxable property in the county for the improvement of highways. Of the proceeds of such tax collected on account of real or personal property situated within any city, by the county treasurer of the county in which such city is located, twenty percent shall be turned over by such treasurer to the treasurer of such city, in the manner provided in section 11-13-06 to be expended under the direction of the governing body of such subdivision in the improvement of the streets and highways thereof. All other proceeds of such tax shall be kept in a distinct fund to be known as the `county road fund' and shall be expended in the improvement of highways as provided in this chapter under the direction of the board of county commissioners. Such taxes shall be in addition to all other taxes for highway purposes otherwise provided by law. The provisions of this section in regard to allocation shall apply to the proceeds of any tax originally levied for other purposes if appropriated or transferred to the county road fund or for expenditure for road and bridge purposes. Section 24-05-01, N.D.C.C. The county road fund created by section 24-05-01 shall be expended only for road machinery and for grading, ditching, and surfacing, in proper form and condition for public travel, such highways or parts of highways, howsoever established, as constitute the principal thoroughfares of the county, communicating with shipping points and market places resorted to by inhabitants of the county, for which the means otherwise provided, in the opinion of the board of county commissioners, are not sufficient. Section 24-05-02, N.D.C.C. The evidence submitted by the commissioners establishes that the Pillsbury and Urban Renewal Funds were set up as a special fund within the Road and Bridge Fund for a new county equipment shop building. Thus the commissioners argue that no road taxes were levied for the new county shop building and that the transfer of the money into the special fund earmarked these receipts for the new county shop building and not for expenditure for road and bridge purposes as provided in  Section 24-05-01, N.D.C.C. Therefore they are not bound by the restriction as provided by Section 24-05-02, N.D.C.C. In other words, the commissioners insist that there was no appropriation of $120,000 for road and bridge purposes but that this sum was specifically appropriated in the budget for the construction of a new county shop building. Although we think that it would have been a better procedure to have covered the Pillsbury Fund and the Urban Renewal Fund into a special building fund within the General Fund, the procedure followed by the County is not so violative of the statutes as to restrict these funds to be expended only for road machinery and for grading, ditching and surfacing highways or parts of highways, as provided by Section 24-05-02, N.D.C.C. The taxpayers also argue that because no resolution has been adopted by the commissioners declaring an emergency and directing the payment of funds from the Emergency Fund, these funds are not available for the purpose of constructing the new county shop building. It is the contention of the commissioners that the proper resolution will be adopted and placed upon the minutes when it becomes necessary to utilize the Emergency Fund. They argue that this is the practice which has been followed in the past and evidence was introduced in support of this contention. We agree that the resolution need not be adopted until that time. Section 57-15-28, N.D.C.C., provides that the County may levy a tax for emergency purposes and create an Emergency Fund. Such taxes when collected shall be covered into such Emergency Fund, and shall be used only for emergency purposes caused by the destruction or impairment of any county property necessary for the conduct of the affairs of the county, emergencies caused by nature or by the entry by a court of competent jurisdiction of a judgment for damages against the county. The emergency fund shall not be used for any road construction or maintenance, except for repair of roads damaged by nature within sixty days preceding such determination to expend emergency funds, or for the purchase of road equipment. The record establishes the necessity for having a county shop building for the repair, maintenance and storage of county road equipment. The County was required to vacate the old county shop building when it was acquired by the Urban Renewal Agency. A temporary shop building was arranged for on a rental basis but it appears that these quarters are inadequate and dangerous. We believe that there was an impairment of county property and that an emergency exists which necessitates the use of the Emergency Fund to pay the unappropriated balance after other available funds have been exhausted. The taxpayers also argue that further evidence that the proposed county shop expenditure is greater in amount than can be paid from current funds or by the annual tax levy is indicated by reason that the County has borrowed, by certificates of indebtedness, $150,000 for the Road and Bridge Fund on September 7, 1971, and $100,000 for the General Fund on December 30, 1971; that this pattern of borrowing has been followed by the County since 1968. The taxpayers argue that this shows deficit financing rather than financing from current revenues. The commissioners, in response to this argument, show that these borrowings are made for interim purposes as authorized by Chapter 21-02, N.D.C.C. The county fiscal year begins on July 1 and ends on June 30 of the following year. Taxes do not become due and payable until January 1 of the year following the beginning of the fiscal year. The County borrowed moneys upon which to operate the County for six months before taxes were payable by use of the certificates of indebtedness. We do not think that this system of operation constitutes deficit spending in the sense that it would activate the restrictive language of Section  11-11-16, N.D.C.C. This section provides that the board of county commissioners may contract for the erection of a building if the expenditures therefor are not greater than can be paid out of the revenue of the County for the current year (the current year having reference to the fiscal year). This practice also does not activate the provisions of Section 11-11-18, N.D.C.C., which requires an election when a proposed expenditure is greater than can be provided for by the annual tax levies. It thus appears that the proposed expenditure for the new county shop building is not in excess of county revenues for the year 1971 and we so hold. Current Available Funds Pillsbury Fund $ 81,500.00 Urban Renewal Fund 25,850.00 Capital Improvement Fund 21,000.00 Emergency Fund 100,949.72 ___________ Total $229,299.72 Projected Cost of Construction of New County Shop Building, including Architect's Fees 224,645.00 ___________ Excess Available Funds $ 4,654.72