Court Opinion

ID: 8201314
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:32:05.005066+00
Date Added: 2024-06-11T16:40:56.113908
License: Public Domain

Heffernan, J.
(dissenting). The majority opinion seeks to solve a problem of the overrun of a municipal contract in a fair and equitable manner. The solution makes sense, and would be eminently lawful and reasonable if the contracting parties were both private entrepreneurs. They are not. A city can deal only in accordance with the general city charter law, and one who deals with a city does so at his peril. He is limited to the recovery of such sums as a city may by state statutes lawfully disburse.
I believe that sec. 62.15 (lc), Stats., applies to the Gottschalks’ claim, and its recovery is limited to an amount not in excess of 15 percent of the sum contracted for.
A city is a body corporate organized under, and subject to, terms dictated by the state legislature. It has autonomy only in the areas authorized by the home rule amendment. The method of municipal contracting is *857not, under the facts of this case, within the ambit of home rule and is fully controlled by general charter statute.
Charles Rhyne has stated the general principles:
“Source and Nature of Contract Powers. Municipal corporations do not possess unlimited power to contract. And hence persons contract with the municipality at their peril and must determine beforehand whether or not the corporation has the power to enter into the particular contract in question. In general, a municipal corporation is the creature of the state and as such its powers are derived from the state.” Rhyne, Municipal Law, p. 254, sec. 10-1.
Bearing these principles in mind, it is apparent that the statutory requirements of sec. 62.15 (lc), Stats., are incorporated in every municipal contract. They must be placed there expressly by the parties or they will be read into the contract by operation of law.
Sec. 62.15 (lc), Stats.,provides:
“Increased quantity clauses. Contracts may include clauses providing for increasing the quantity of construction required in the original contract by an amount not to exceed 15 per cent of the original contract price.”
While this is not a mandatory provision in a municipal contract within the requirements of sec. 62.15, Stats., it is a grant of power to the municipality which, unless exercised, curtails the right of a municipality (except in unusual cases giving rise to equitable remedies) to pay any excess over the contract price. If any excess is to be paid, the provision must appear in the contract.
Hence, if we are to find, as does the majority, that sec. 62.15 (lc), Stats., does not apply, logic leads to the conclusion that no payments whatsoever may be made for the excess fill.
The contract itself, however, incorporates the essence of sec. 62.15 (lc), Stats. Paragraph XVIII, relating to unit bid quantities, states:
*858“A. The amount of each bid unit may be subject to increase or decrease but the total bid sum will determine the total amount of work plus or minus 15% of the total bid.”
Accordingly, sec. 62.15 (lc), Stats., is in substance incorporated in the contract itself.
It appears that, even if the individual unit costs to the owner are permitted to be increased, the total is limited to plus or minus 15 percent of the total bid. This being the case, it is difficult to find a rationale that would justify payment for an unlimited number of units.
The majority view apparently is that a contract bid on a unit basis is open-ended, i.e., that the city, as the owner, could, as long as the scope of the work remained the same, insist on an infinite number of units; and the contractor could use an infinite number of units irrespective of total cost to the city.
There is some support for this view. Probst v. Menasha (1944), 245 Wis. 90, 94, 13 N. W. 2d 504, states, “There is no limitation upon the amount of sidewalk that the contractor might be required to do, his bid being on a unit basis.”
While this holding appears to ratify unit priced contracts, and I believe properly so, Probst does not hold that the contractor could have installed an infinite number of sidewalk units in the city and charged for them without limitation.
Thomsen-Abbott Construction Co. v. Wausau (1960), 9 Wis. 2d 225, 100 N. W. 2d 921, implicitly recognizes the validity of unit price contracts, but Thomsen-Abbott, like Probst, was based on contractual relationship that arose before the enactment of sec. 62.15 (lc), Stats.
While the matter is not wholly free from doubt, I see sec. 62.15 (lc), Stats., as a limitation of the implicit holdings of Thomsen-Abbott and Probst. The effect, therefore, of sec. 62.15 (lc) is that the units contracted for — “the quantity of construction” — may not be in*859creased so as to result in more than 15 percent increase in the contract price.
Only this interpretation is fully consonant with the purpose of the bid statute.
“The bid statute is intended to secure competition and to attain the best work or materials or supplies at the lowest practical price. It is also intended to prevent favoritism, extravagance, fraud and corruption. The statute is enacted for the protection of taxpayers and not for the benefit of bidders. The statute should be construed with reference to the public interest. See McQuillin, Mun. Corp., 3rd Ed., Vol. 10, pp. 266 and 267, Sec. 29.29 and Victora v. Muscoda, 228 Wis. 455, 279 N. W. 663.” League of Wisconsin Municipalities, The Letting of Contracts (1953), p. 23, sec. IV.
The city council and the city attorney and the trial judge properly concluded that the contractor could recover no more than 15 percent in excess of the bid price. To approve a payment that is 300 percent in excess of the amount bid would encourage the very abuses sec. 62.15 (lc), Stats., is designed to avoid. The use of unit price contracts in a manner interpreted by the majority would make reasonable municipal contract budgeting impossible. It would free the common council of fiscal responsibility to the taxpayer. If unit pricing is to be the “open sesame” to unlimited contractual obligations by municipalities, the legislature should clearly say so. I would affirm the trial court.
I am authorized to state that Mr. Justice Wilkie joins in this dissent.