Court Opinion

ID: 3880054
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:11:50.552323+00
Date Added: 2024-06-11T07:41:54.124760
License: Public Domain

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 *Page 236 
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 theater, 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. 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, *Page 237 
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 $5,000.00 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 consideration of the two bids, decided to accept the bid of *Page 238 
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 his 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.
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 completed 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. Kingstonv. 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. McNeill v. Boston Chamberof Commerce, 154 Mass. 277; 28 N.E., 245; 13 L.R.A., 559. Erving v. 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 *Page 239 v. Minneapolis, 59 Minn., 111; 60 N.W., 1081. Gantenbeinv. Pasco, 71 Wn., 635; 129 P., 374. Maeder v.Vanello, 109 Or., 562; 220 P., 155. Bromley v. McHugh,122 Wn., 361; 210 P., 809.
But there cannot appear any sound reason why, notwithstanding the general rule, a municipality may not, by the broadness of the terms of the call, by the absence of a reservation of the right to reject any or all bids, by its conduct and promises to the bidders, by the attendant and connected circumstances, inducing confidence and action by the bidders, bind itself in advance to accept the most favorable bid and be estopped from relying upon the general rule.
Municipalities as well as individuals are bound to treat those with whom they deal with the utmost fairness and consideration. If, therefore, they have made representations, openly expressed or fairly implied, that on a certain day they propose to let a certain contract to the most favorable bidder, without reservation, and induce action in the confidence of such representations, the most favorable bidder, in all honesty and justice, acquires a right which cannot be denied except in the exercise of a duty of trust which the municipality owes to its citizens. In the absence of such considerations, which should be made plainly to appear, such as his insolvency, financial inability, bad character, or other valid reason, he will have performed his part of the engagement and is entitled to its fruits.
"If under valid advertisement no discretion is reserved to the municipal officers, then it only remains to perform the ministerial function of opening the bids, ascertaining the lowest and complying with formal requisites." 28 Cyc., 662.
In the case of Anderson v. Board, 122 Mo., 61;27 S.W., 610; 26 L.R.A., 707, it is said:
"That binding obligations can originate in advertisements addressed to the general public may be assumed as settled law today. But the effect to be given to such an advertisement *Page 240 
as the basis of a contract depends entirely on the intent manifested by its terms. A public proposal of that nature may be so expressed as to need but an acceptance, or the performance of some act by a person otherwise undesignated, to constitute an enforceable legal agreement, while, on the other hand, the proposal may amount to nothing more than a suggestion to induce offers of a contract by others."
It has been held in numerous cases that a statute requiring municipal contracts to be let to the lowest bidder is for the benefit of the municipality, as a protection to the public, and not for the benefit of the bidder; and that the lowest bidder has no right of action, under such a provision, to recover profits which he might have made had his bid been accepted; nor can he enjoin a violation of such statute. 2 Dillon, Municipal Corp. (5th Ed.), § 811. ColoradoCompany v. Murphy, 78 F., 28; 23 C.C.A., 631; 37 L.R.A., 630. But this is a different proposition from that where the municipality has bound itself to accept the most favorable bid. In McNeil v. Boston Chamber of Commerce,154 Mass. 277; 28 N.E., 245; 13 L.R.A., 559, the committee struck out of the call the clause reserving the right to reject any or all bids, and specifically agreed, before the bids were submitted, to award the contract to the most favorable bidder. The plaintiff was such bidder, but the contract was awarded to another. The Court held that he was entitled to damages for the breach.
The question, then, in this and all similar cases, is whether or not in the call for bids, in connection with the attendant circumstances, the City Council intended to and did obligate itself to accept the most favorable bid for the contemplated lease. That such was their intention, and that it was so understood by all the parties concerned, we have not the shadow of a doubt.
For many years previously it had been the custom of the City Council to award the rental contracts upon competitive *Page 241 
bids. The plaintiff had been a tenant of the opera house from 1911 to 1919 at recurrent increased rentals. In 1919 the lease passed out of his hands, upon competitive bids, to Schnibben  Howard, whose bid was only $150 per annum more than the plaintiff's. In June, 1923, the plaintiff learned of negotiations between the City Council and Schnibben  Howard, looking to a renewal of the lease which was not due to expire until May, 1924, nearly a year from that date, and that it was proposed to fix the rental at either $2,700 or $3,600. The City Council admits in its answer that such negotiations were on foot, but denies information or knowledge sufficient to form a belief as to the proposed rental, a matter necessarily within their knowledge. The plaintiff protested against such premature renewal and insisted upon competitive bids as had been the custom, and by which he had been ousted in 1919. He received no answer to this protest and demand. Again he repeated his protest and demand for competitive bids, and expressed his willingness to pay $5,000 rental. He received from the Mayor the assurance that his proposition, which was mainly his demand for competitive bids, would be submitted to Council; at the meeting held on August 31st, attended by O'Dowd, Schnibben, and two other parties apparently interested, the Council decided, ostensibly if not actually yielding to the demand for competitive bids, to issue a call for bids upon a lease for three years. This call addressed, "To Whom It May Concern," was mailed to O'Dowd, Schnibben Howard, and to the two others, declaring that "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." It set forth the conditions of the proposed lease, and fixed the time limit for submission of bids at September 5th, 9:30 a. m.
It is not a conclusive circumstance, but strongly persuasive of the intention of the City Council to award the contract to the highest bidder, that the call for bids contained no *Page 242 
reservation of the right to reject any or all bids; the fact that it was issued at the call of the plaintiff for competitive bids, coupled with the absence of such reservation, could only mean that they intended, and it was so understood, that the award was to be made to the most favorable bidder.
The only two bids submitted were those of O'Dowd at $5,304, and of Schnibben  Howard at $4,350. It does not appear at what hour of the 5th the Council acted, but when the time for bids expired at 9:30 a. m. the bids were opened, and at some time that same day the Council awarded the lease to Schnibben  Howard at the smaller rental of $4,350.
The return of the City Council alleges that the call for bids was only a statement of the conditions upon which the Council would consider an offer to lease the opera house. The call conveys no such impression, but declares, "the City of Florence proposes to lease the opera house for a period of three years," and directs "all concerned" to submit proposals for the lease by a certain time. Such interpretation is also inconsistent with the promptness with which they acted upon the bid of Schnibben  Howard, the bids apparently causing slight hesitation in their consideration.
In reason and justice the plaintiff was entitled to know the ground upon which his more favorable bid was rejected. It does not appear that at the time the Council gave any at all. In their answer and return they urge no objection to his financial ability, to his character, or to his capacity to carry out his contract. They say that the rejection was in the exercise of their "discretion", a very elastic and undefined term. In the absence of any facts upon which the exercise of such discretion was based, the rejection was nothing less than the exercise of arbitrary power. They do specify that a lease of the opera house to the plaintiff would create a monopoly, and that their action was in the interest of the public who frequent such places of amusement. We fail to find in the record the slightest evidence of the apprehended evil. The Council in awarding the lease to O'Dowd would *Page 243 
not attempt to confer upon him the exclusive right to operate picture shows in the City of Florence; they could not do that; there is nothing to show that the plaintiff would continue his present place of business; and if he ran both places, there is nothing to prevent Schnibben  Howard from doing what O'Dowd did when they secured the lease which he had been holding, locate elsewhere. There is nothing to show that the award to O'Dowd would prevent any other man from opening a picture show elsewhere. There is no possible ground for the apprehension that an award to O'Dowd would create a monopoly in the picture show business in the City of Florence, and, in our opinion, the alleged reason, manifestly an afterthought, is without the slightest support.
Mr. Dillon says (Volume 2, § 811):
"But in order to give the action of the board or officers any legal effect, they or it must exercise jurisdiction and make a determination based upon some facts. If the board, intrusted with the duty of awarding the contract, refuses to accept the lowest bid for work or supplies, there must be some facts tending to show that it is not that of a responsible bidder, or there must be at least some claim to that effect. An arbitrary determination by such a body to accept the highest bid, without any facts justifying it, cannot have the effect of a judicial determination and must be designated as a palpable violation of the law."
In 28 Cyc., 663, it is said:
"But under all circumstances the lowest bidder has the right to fair consideration and treatment; and an award of a contract to another by corruption, by collusion, or for any other than legal and just consideration, will be voidable at his option, and action will lie in his favor to enforce his contract."
It is a striking circumstance that, at the meeting of August 31st, the plaintiff, who had persistently demanded a letting upon competitive bids and had placed the Council in a position *Page 244 
where they could not renew Schnibben  Howard's lease at $2,700 or $3,600, and doubtless thereby becamepersona non grata, declined to submit a bid at all, after competitive bids had been determined upon, until he was assured that his bid would be considered upon the same basis as Schnibben  Howard's. Was it so considered? If his bid was to be rejected upon the ground that he was already operating a picture show at another location, that was a fact which the Council knew as well when they gave the assurance on August 31st, as they did on September 5th, when they rejected it on that ground, as they now claim that an award to him would create a monopoly. The assurance manifestly was not maintained.
It follows, therefore, that the plaintiff is entitled to a decree of specific performance requiring the City Council to enter into a contract with him in conformity with the calls for bids and his bid, and that the injunction should stand.
The judgment of this Court should be that the decree of the Circuit Court be modified, and that the cause be remanded to that Court for such further orders as may be necessary to carry into effect the conclusions herein announced.