Court Opinion

ID: 6907473
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:02:52.901398+00
Date Added: 2024-06-11T16:06:24.659046
License: Public Domain

On Rehearing.
(199 Pac. 605.)
Former Opinion Sustained.
In Banc.
This is an action by the plaintiff as a contractor against the defendant, a municipal corporation, to recover upon an alleged breach of the duty of the city to provide a fund to pay for the improvement of Front Street from its town limit on the north bound*493ary to its limit on the south, founded upon a written contract made between them on July 18, 1913, in which the plaintiff prays for judgment for $8,194.13, and interest. This case was arg’ued in Department 1 and the opinion of that branch of the court was written by Mr. Justice Burnett, on December 7, 1920, in which the judgment of the lower court in favor of the plaintiff for the full amount of its claim was reversed and the case dismissed. A petition for a rehearing was filed and allowed and the case was argued in banc on June 10th. The facts are fully stated in the former opinion. It was. there held in substance: (1) That the council was proceeding under the petition of the local abutters and not in pursuit of its general authority over the streets and that the improvement was founded upon the special proceeding; that the town having entered into the contract with the plaintiff under a procedure based upon that petition it must be followed and could not be changed. (2) Where the defendant proceeded by ordinance to improve a street, the payment for which was to be derived only from assessments on adjacent property but ultimately abandoned its original plans and specifications on which bids had been invited and required each bidder to furnish his own specifications, the subsequent proceedings by reason thereof were void and the contract made with the plaintiff as the lowest bidder would not support a cause of action against the defendant. In a very able brief on rehearing the plaintiff contends that the former opinion “is in irreconcilable conflict with the settled law in this state and with the weight of the judicial authority.”
Former Opinion Sustained on Rehearing.
*494For appellant there was a brief over the name of Mr. D. P. Matthews, with oral arguments by Mr. M. B. Meacham and Mr. B. G. SJmlason.
For respondent there was a brief over the name of Messrs. Wood, Montague & Matthiessen, with oral arguments by Mr. H. M. Esterly and Mr. B. W. Montague.
JOHNS, J.
Section 35 of the charter provides:
“The council has power, and is authorized whenever it deems it expedient, to alter or establish the grade and to improve any street, or alley, or parts thereof, now or hereafter laid out or established within the corporate limits of the town. The power and authority to improve a street or alley includes the power or authority to improve the sidewalks or pavements, and to determine and provide for everything convenient and necessary concerning such improvement. ’ ’
This gives the town council general power to improve the streets in its own discretion and to make the town itself liable for the cost of such improvements. By Section 36, the “Council has the further power and authority to make the improvements named in said section at the cost and expense of the property adjacent to the said improvement.” This required that the ordinance shall be read at two regular meetings and the posting of three notices thereof in public places. Section 37 says, “the Council must provide by ordinance for the. establishment of the grade, for the determination of the cost of the improvement, and the share which each block, lot, or parcel of real property abutting upon or adjacent thereto shall pay.” It also provides for the levying and collecting of the assessments and making them a *495lien upon the real property and for its sale and redemption. Section 47 provides that upon the petition of one or more property owners abutting upon the street for any specific improvements, the council is “empowered to order the whole or any part of the street of the city so petitioned for to be improved in accordance with said petition; to levy and collect an assessment, upon all lots and parcels of land abutting upon said improvement, to defray the whole or any portion of the costs and expense thereof.” "When an improvement has been thus initiated, Section 48 provides that the council shall require the city engineer to make plans and specifications for the employment, estimates of the work to be done and the probable cost which should be filed with the recorder and “the improvement of each street, or part thereof, shall be made under separate proceeding. If the Council shall find such plans, specifications, and estimates to be satisfactory, it shall approve the same,” and shall by resolution, “declare its purpose of making said improvement.” Section 50 provides for the filing of a remonstrance within ten days after the posting of the notices by owners representing three fourths in area of the property abutting upon the street. Section 51 enacts that if no remonstrance is filed, “the Council shall be deemed to have acquired jurisdiction to order the improvement to be made, * * which shall conform in' all particulars to the plans and specifications previously adopted. * * ” Section 52 enacts that “the Council shall have power to award the contract * # in strict accordance with the specifications therefor,” and that “such contract or contracts shall be let to the lowest responsible bidder”; that the council shall have the right to reject all bids and that if a satisfactory, bid is not received “the *496Council may proceed with, the improvement by furnishing the materials, employing and placing in charge some suitable person as superintendent, and causing the work to be done, in whole or in part, by day’s labor, and by having such parts of the material furnished or work done by contract as shall appear to the Council advantageous.” All of such provisions follow and relate to Section 36 in and by which the council has special powers only to make street improvements. In the instant case the proceedings were initiated by a petition of the abutting property owners under the provisions of Section 36 et seq. which were followed down to and including a portion of the provisions of Section 51, when the city council rejected all bids and again advertised for bidders upon the plans and specifications then on file and in addition thereto, asked for bids for hard surface pavement and stating that the bidders for that kind of a pavement should fumsh their own plans and specifications. In response to that notice, the plaintiff prepared its own plans and specifications and submitted its bid thereon which the town finally accepted, resulting in the contract between it and the plaintiff described in the complaint.
Under the charter there are two different methods for the making of street improvements, one under Section 35, which gives general power to the council and the cost of which is a claim against the city itself, the other under Section 36 et seq. under which the council has only a special power and the cost of the improvement is a charge or lien on the property only of the abutting owners. The petition of the abutting property owners to improve and the subsequent proceedings leading up to and the making of the contract are founded upon the special powers of *497the council under Section 36 et seq. as distinguished from its general powers as defined by Section 35, and in the instant case the engineer prepared the plans and specifications under the provisions of Section 48, which were afterwards approved by the council, and the improvement was ordered made under Section 51 and the notices were posted under the provisions of Section 52. The charter distinctions are important. Acting for and representing the city itself, the council might be strongly opposed to the making of a street improvement at the. expense of the city and yet willing to authorize the improvement of a street upon the petition and at the expense of the abutting property owners. Here the fact remains that the proceedings were inaugurated pursuant to the special powers of the council under Section 36, as distinguished from its general powers under Section 35. Section 52 provides “such contract or contracts shall be let to the lowest responsible bidder.” After calling for the original bids which were based upon the plans and specifications prepared by the city engineer and approved by the council, it rejected all bids and again advertised for bids upon the original plans of the engineer' and at the same time and in the same notice called for bids for a hard surface pavement, upon plans and specifications to be prepared by the bidder and submitted with his or its bid. As a result the plaintiff was awarded the contract for a hard surface pavement on its own plans and specifications. The city now contends that the council was acting under its special powers; that this action of the council was not authorized under proceedings for a street improvement, initiated under Section 36 et seq.; that it is in violation of the express provisions of Section *49852 that such “contracts shall he let to the lowest responsible bidder” and that plaintiff’s contract was void ab initio. If in making the contract the council was acting under its special powers as distinguished from its general powers, then it must follow under the authorities cited in the original opinion that the contract was void for the want of competitive bidding. Plaintiff now contends that because the city had also the general power to contract it is now liable to the plaintiff even though the contract was made by the council under its special powers. Among other things the complaint alleges that the “town of Milwaukie has never made or levied any valid assessment” upon the abutting property “or created or provided any special fund” to pay for said improvement and that it “has negligently and carelessly failed to comply with the requirements and provisions of its said charter essential to secure and provide said special fund; that defendant has wholly failed, neglected and refused to enforce the provisions of said charter essential to levy and collect the valid assessment upon the lots and parcels of land which abut upon said improvement”; that it has “at all times failed, neglected and refused and still and now does neglect and refuse to take further or any other action to institute or prosecute any further or other proceedings; * * that by reason and as a result of said negligence of said defendant, Town of Milwaukie, and its failure to create said special fund wherewith to pay said contract price and said warrants, as aforesaid, the plaintiff has been and is damaged in the full sum” of its claim. Counsel for appellants contend:
“This is an action for negligence. That is settled by the pleadings and by the election of the plaintiff at *499the inception of the trial. Since this action is one for negligence on the part of the defendant for failing to comply with its contract, it of course follows that in order for the plaintiff to recover it must show that there was a valid contract between the plaintiff and the defendant.”
In their brief on rehearing respondent’s counsel says :
“The court will remember that this is an action by the contractor, plaintiff below, against the City of Milwaukie, to recover for a'breach of the duty cast upon the city by law to provide- a fund to pay for the improvement of a street, * * .”
Under the first subdivision of points and authorities, respondent says:
“When a city has general power to contract for improvements, the law raises an inescapable obligation to pay the contractor for work contracted for and properly done, which comes within that power. If it undertakes to make the improvement under the local assessment plan and fails to make a good assessment, that very failure is a wrong for which the contractor may recover from the city, ex delicto. Subd. 13, § 22, Milwaukie Charter, p. 51, Abstract, § 35, Milwaukie Charter, p. 51, Abstract; North Pacific Lumber & M. Co. v. East Portland, 14 Or. 3 [12 Pac. 4]; Portland Lumber & M. Co. v. East Portland, 18 Or. 21 [22 Pac. 536, 6 L. R. A. 290]; Commercial Nat. Bank v. Portland, 24 Or. 188 [33 Pac. 532, 41 Am. St. Rep. 854]; Little v. City of Portland, 26 Or. 235 [37 Pac. 911]; Jones v. City of Portland, 35 Or. 512 [58 Pac. 657]; O’Neil v. City of Portland, 59 Or. 84 [113 Pac. 655]; Carruthers v. Astoria, 72 Or. 505 [143 Pac. 899, 1106]; Dennis v. Willamina, 80 Or. 486 [157 Pac. 799]; Morris v. Sheridan, 86 Or. 224 [167 Pac. 593].”
Under point 2, a number of cases are cited from other jurisdictions in line with the Oregon decisions. Section 80 of the charter provides:.
*500“And the said contractor shall not require nor compel Milwaukie by any legal process or otherwise to pay the same out of any fund, except in cases where for any reason such assessment shall be invalid.’*
The contract provides:
“But that the party of the first part shall not nor shall any of the officers be required to pay any of said sums from any other fund than the special fund so raised for such improvement, except in the event that if for any reason the party of the first part, shall fail, neglect, or refuse to make or levy a valid assessment against said real property or any part thereof abutting upon the part of said street to be so improved or benefited by said improvement.”
The plaintiff bases its right to recover upon these provisions in the charter and contract and in legal effect contends that Section 80 of the town charter should be read into and made a part of Section 35. It also contends that:
“The letting of this contract strictly followed the provisions of the charter for the improvement of the streets at the abutters’ expense.”
The contract was either let under the general powers of the council as prescribed in Section 35 or under the special powers as defined in Section 36. If the contract “strictly followed the provisions of the charter for the improvement of the streets at the abutters’ expense” as respondent contends, it was the exercise by the council of the special power conferred upon it under Section 36 and not of the general power defined in Section 35. It is admitted that the proceedings were initiated upon the petition of abutting property owners and that all of the special proceedings of the charter were complied with up to and including the point when all bids were rejected by the *501council. Up to that time it cannot be claimed that the council was proceeding in or acting under its general powers. The question is thus presented as to whether after a special proceeding has been initiated under the section of the charter which confers special powers upon it, the council can then change the nature and legal effect of that proceeding and make the city itself liable under its general powers, and whether such a change was made in this case. Subsequent events conclusively show that it was never the purpose or intent of the council to change from one form of liability to another and that it was not the original intent of the plaintiff to claim or enforce a liability against the city under the general powers of the council. The contract also provides:
“That the payment by the party of the first part for the performance of this contract shall be made from a special fund created for that purpose pursuant to terms and provisions of the charter of said Town pertaining to the construction of street improvements and for the assessment of the cost thereof against the real property benefited and for the collection of said fund, but that the party of the first part shall not nor shall any of the officers be required to pay any of said sums from any other fund than the special fund so raised for such improvement, etc.”
The letting of the contract was followed by a completion of the work and the city undertook to and did levy an assessment upon the property of the abutting property owners for the purpose of creating a fund to pay the plaintiff the full amount of his contract.
The contract was made on July 18, 1913. The price was $44,051.60. The complaint alleges that the defendant duly issued to the plaintiff its certain warrants drawn upon its treasurer amounting to *502$43,626.60, “and that each and all of said warrants provided that the same should be paid out of a special fund known as Front Street Fund”; that from different sources including “payments voluntarily made to it by owners of said' real property which abuts upon said Front Street,” the plaintiff has received and applied upon its contract $35,934.51, leaving a balance of $8,190.14 with accrued interest. This action was commenced March 1,1918. From the pleadings and the contract, the subsequent conduct of both parties and all of the surrounding facts and circumstances, it is clearly apparent that in the making of the contract, the town council was acting under its special powers and that it never intended to bind the city under its general powers and that in accepting the contract, the plaintiff was then relying upon the authority of the city to make a contract under its special powers. That is to say that both parties understood that the contract was made under the special powers of the council. The contract having been made under such special powers, it must follow that section 52 of the charter to the effect that the contract “shall be let to the lowest responsible bidder” must be read into and is a part of the contract and for such reason it is void. Plaintiff’s cause of action is founded upon the failure and neglect of the city to levy and collect a sufficient assessment upon the property of abutting owners to pay the full amount of the contract in the manner provided for in Sections 52 and 80 of the charter and of that portion of the contract above quoted. Those sections apply to and are a part of the amended charter of February 13, 1911, defining the special powers of the council and the method of procedure for the improvement of a street on the *503petition of the owners of abutting property. That is to say all of the different sections above quoted apply to an improvement made under the special powers of the council and should be read into and made a part of plaintiff’s contract. In the final analysis, the plaintiff is now seeking to enforce a liability against the city under its general powers to contract, founded upon the alleged failure and neglect of its council to levy an assessment upon the property of abutting owners under a contract which its council made under its special powers. The charter provides that the contract under such special powers shall be let to the lowest responsible bidder. It being awarded to the plaintiff upon its own plans and specifications and under the special powers of the council, the contract was void ab initio. Hence this is an action to recover from the city for its failure and neglect to levy and collect an assessment upon property owners under a void contract. If the plaintiff had a contract with the council under its general powers or a valid contract under its special powers, its case would then come within the rule of and would be sustained by the Oregon decisions cited, upon which plaintiff relies. Those decisions were based upon contracts which were valid in their inception but here plaintiff has a void contract which the defendant through its council made under its special powers and because the defendant has failed and neglected to carry out and enforce the void contract plaintiff contends that the town has become and is now liable under its general powers to contract. In other words, that through the failure and neglect of the defendant, a contract which was void in its inception has become and is now a valid contract which plaintiff can enforce. In Frush *504v. City of East Portland, 6 Or. 281, the city entered into a contract for street improvements under its general powers and the opinion says:
“It will he observed that though the improvements were local, there is nothing in the contract to show that it was in the minds of the contracting parties at the time the same was entered into that a special and local tax was to be resorted to in order to raise the fund from which the warrants were to be paid. * * Had the contract contained a stipulation that the respondent was to be paid out of a fund arising from the tax collected from the owners of the property abutting the street to be improved, he would have no right to look to any other fund for payment of his warrants.”
Hawthorne v. East Portland, 13 Or. 271 (10 Pac. 342), was a suit by a property owner to enjoin the sale of certain lots for the payment of a street assessment lien and it was there held that:
“A power conferred upon a municipal corporation to improve the streets and tax the cost thereof upon the adjacent property is a special and limited power, which can be exercised only by a strict observance of every requirement of the act confirming it.”
Portland Lumbering & Mfg. Co. v. City of East Portland, 18 Or. 21 (22 Pac. 536, 6 L. R. A. 290), was an action by the contractor against the city to recover “the agreed price and value of certain materials furnished by the plaintiff for the defendant and used in the improvement of one of its streets by the direction of its common council.” The power of the city to contract was not involved. Commercial National Bank v. City of Portland, 24 Or. 188 (33 Pac. 532, 41 Am. St. Rep. 854), squarely holds that where a city makes a contract for a street improvement to *505be paid for out of a special fund and the contractor agrees “he will not compel the city by legal process or otherwise to pay for the improvement out of any other fund” and where the city for five years has neglected to collect the fund, it is liable in an action for damages, but there the validity of the contract was never questioned and the action was founded upon a valid contract for the failure and neglect of the city to enforce it. On legal principle, the case of Commercial National Bank v. City of Portland, supra, was followed and approved in Little v. City of Portland, 26 Or. 235 (37 Pac. 911). In Jones v. City of Portland, 35 Or. 512 (58 Pac. 657), the court says:
“Where the expense of improving a street in a city is to be paid from a special fund to be raised by an assessment on the abutting property, the failure of the municipality to comply with any of the requirements of the charter essential to supply such fund, or any unreasonable delay in collecting the money to pay for such improvement gives the contractor a right of action ex delicto against the city for damages, notwithstanding a provision in the contract that he shall look for payment to such special fund only, and that he will not require the municipality to pay for the same out of any other fund.” Commercial Nat. Bank v. City of Portland, 24 Or. 188 (33 Pac. 532, 41 Am. St. Rep. 854), followed. * *
“Whatever confusion there may be in the authorities elsewhere, the holding of this court is that, where the expense of improving a street in a city is to be paid from a special fund to be raised by an assessment on the abutting property, a failure of the municipality to comply with any of the requirements of the charter essential to supply such fund * * or any unreasonable delay in enforcing such provisions or collecting and paying over the money * * gives the contractor a right of action ex delicto against the corporation for damages.”
*506In O’Neil v. City of Portland, 59 Or. 84 (113 Pao. 655), this court held that where the expense of improving a street is to be paid from a special fund, a failure of the city to comply with the requirements of the charter to provide such a fund gives the contractor a right of action ex delicto for damages and where a complaint alleges that owing to the negligence of the city in making an assessment and its failure to exercise diligence to create and provide such a fund for a period of five years, it states a cause of action. It will be noted that in every Oregon case cited, the validity of the contract was never questioned and that the city had made a valid contract.
4. With all due respect to learned counsel, this court has never held that a city is liable under its general powers for its failure and neglect to enforce a void contract which was made by its council under its special powers. For such reasons we adhere to the former opinion.
Former, Opinion Sustained on Behearing. Petition eor Further Consideration Denied.