Court Opinion

ID: 875595
Source: CourtListenerOpinion
Date Created: 2013-06-04 20:06:40.455852+00
Date Added: 2024-06-11T15:26:52.310699
License: Public Domain

No. 12635

          I N THE SUPREME COURT O THE STATE O MONTANA
                                 F           F

STATE O MONTANA, EX REL.
       F
SLETTEN CONSTRUCTION COMPANY,
a Montana C o r p o r a t i o n ,

                                 Petitioner,

CITY O GREAT FALLS, STATE O MONTANA,
         F                       F
CURTIS A. A M N S N D N L L. OSTREM,
             M O DO , O AD
          .
J O H N H SHEFFELS , WILLIAM E. S M O and
                                     A SN
WILLIAM M. SCOTT, a s Commissioners t h e r e o f ,
and DEPARTMENT O REVENUE, STATE O MONTANA,
                  F                         F
and KEITH L. COLBO, a s D i r e c t o r t h e r e o f ,

                                 Defendants.

ORIGINAL PROCEEDING:

Counsel of Record:

     For P e t i t i o n e r :

              J a r d i n e , Stephenson, Blewett & Weaver, G r e a t F a l l s ,
                Montana
              Alex B l e w e t t a r g u e d , Great F a l l s , Montana

    F o r Defendants:

              John Yuenning and P a u l M i l l e r , G r e a t F a l l s , Montana
              John Kuenning a r g u e d , G r e a t F a l l s , Montana
              Smith, Emmons and B a i l l i e , G r e a t F a l l s , Montana
              James R . Walsh a r g u e d , G r e a t F a l l s , Montana
              Terence B. Cosgrove a r g u e d , Helena, Montana
              Robert W . Corcoran a p p e a r e d , Helena, Montana
              R. Bruce McGinnis a p p e a r e d , Helena, Montana

                                                  Submitted:    November 1 6 , 1973

                                                   Decided : Wc    13 1
                                                                      m
Filed :
PER CURIAM:
        This is an original application for a writ of mandate or
other appropriate writ to compel the City of Great Falls, Montana
to award a public works construction contract to petitioner
Sletten Construction Company, a Montana corporation. The essence
of petitioner's contention is that it is entitled to the contract
award under the provisions of ~ontana's resident contractor pre-
ference law.
        An order to show cause was issued setting the matter for
hearing on November 16, 1973; service was accomplished on de-
fendants: the City of Great Falls and its Commissioners; the
Department of Revenue, State of Montana, and its Director; and
upon the successful bidder, Acton Construction Company, Inc. of
Hugo, Minnesota.   Leave to intervene was granted to Acton; a
motion to quash was filed by the Department of Revenue; answers
were filed by all defendants and intervenor; briefs were filed
by all parties; and oral argument was heard at the hearing.
        Thereafter this Court by judgment dated November 21, 1973,
accepted jurisdiction; held Acton1s affidavit of residency in-
sufficient to support the certificate of residency issued by the
Department of Revenue and annulled the same; ruled that the parties
were free to proceed thereafter in accordance with law; and indi-
cated a written opinion would follow.   Subsequently, the City of
Great Falls revoked its original award and awarded the contract
to petitioner Sletten Construction Company.
        The relevant facts indicate the City of Great Falls invited
bids on a public works construction contract on improvements to
its water treatment plant which was denominated "Contract 2, Water
Works Improvements1'. It received several bids, the two lowest
being that of Acton Construction Company, Inc., a foreign corpora-
tion of Hugo, Minnesota, in the amount of $1,752,240, and the
Sletten Construction Company, a Montana corporation, of Great Falls
in the amount of $1,775,000.   It is to be noted that lett ten's
bid is less than 3% higher than Acton1s.
         At all material times in 1973 Acton had a Montana contractor's
license, but had not initially qualified as a resident contractor
under ~ontana'sresident contractor preference law. However in
October 1973, Acton filed with the Department of Revenue, State
     Montana, an affidavit seeking resident contractor status stating
in pertinent part:
         "Affiant states that at all times during 1973
         all materials, supplies and equipment offered
         by Acton Construction Co., Inc. on any Public
         Works Contracts are produced in Montana by
         industries located in Montana insofar as such
         materials, supplies and equipment are available.
                1
              'With the exception of selected supervisory
          personnel Montana labor is exclusively employed
          on all Public Works Contracts involving Acton
          Construction Co., Inc. in the State of Montana."
On   the basis of this affidavit Acton requested recognition as a
resident bidder as of January 9, 1973.         The Department of Revenue
thereupon issued its certification of Acton as a resident con-
tractor under section 84-1925, R.C.M. 1947.
         On November 6, 1973, the City Commission of Great Falls
acting on the basis of this certification passed a resolution
accepting the bid of Acton and authorized the City Manager to
execute the necessary contracts.
          Petitioner brought the instant original proceeding in
this Court thereafter.
         Defendants and intervenor raise the following issues which
we will summarize:
          ( ) The standing of petitioner to maintain this action.
           1
          (2)       The appropriateness of an original proceeding for
writ of mandate as a remedy.
          (3)       The legality of the actions of the Department of
Revenue and the City of Great Falls under ~ontana'sresident con-
tractor preference law.
         The Department of Revenue and Acton take the position that
Sletten has no standing to challenge the validity of the ~epartment's
action by a proceeding seeking judicial review. They cite in
support: State ex rel. Stuewe v. Hindson, 4 Mont. 429, 120 P. 485;
                                           4
Koich v. Cvar, 111 Mont. 463, 110 P.2d 964; Ruidoso State Bank v.
Brumlow, 81 N.M. 379, 467 P.2d 395; Baltimore Retail Liquor Package
Stores Association v. Kerngood, 171 Md. 426, 189 A. 209, 109 A.L.
R. 1253; State ex rel. Rouveyrol v. Donnelly, 365 Mo. 686, 285
S.W.2d 669.    In our view all these cases are clearly distinguishable
and do not support the proposition that Sletten has no standing in
the instant proceeding.
        We recognize the broad proposition that an unsuccessful
bidder has no standing in mandamus or otherwise to control the
discretion of the city council in awarding a contract to the lowest
responsible bidder.   The relief granted in the instant case does
not do this.   On the contrary, this Court's judgment of November
21 simply annulled the certificate of residency the Department of
Revenue granted Acton, leaving the parties free to proceed in ac-
cordance with law.    A resident contractor such as Sletten who,
in effect, had been denied its statutory preference is an aggrieved
party entitled to judicial review.    For an example of cases in-
volving judicial review under resident contractor preference
statutes at the instance of unsuccessful bidders, see Stebbins &
Roberts, Inc., v. Pulaski Glass & Mirror Co., 233 Ark. 449, 345
S.W.2d 912; Schrey v. Allison Steel Mfg. Co., 75 Ariz. 282, 255
P.2d 604.
        The Department of Revenue and intervenor next contend that
a writ of mandate is not proper in the instant case because it will
not lie to control discretionary acts; the contract award has
already been made; and administrative remedies within the Department
of Revenue have not been exhausted.
        In this case the judgment of November 21 did not attempt to
control any discretionary acts of public agencies but simply can-
celled and annulled a certificate of residency granted a Minnesota
contractor by the Department of Revenue upon which the city relied
in making the contract award.   As this certificate of residency was
invalid, we simply annulled it and left the parties in their original
position.
          We recognize the general principle that ordinarily adminis-
trative remedies must be exhausted before applying for judicial
review.        However, this principle has no application to the instant
case.     Sletten was not a party to the administrative proceedings
awarding the certificate of residency to Acton, had no notice
thereof, and could hardly be said to have an administrative remedy
under such circumstances.
          The principal issue is the legality of the certificate
of residency issued by the Department of Revenue to Acton upon
which the City relied in its original contract award.
          Section 82-1924, R.C.M. 1947, grants a preference to resi-
dent contractors over non-resident contractors in bidding on
public contracts, providing in relevant part:
           II
           In order to provide for an orderly administration
          of the business of the state of Montana in awarding
          contracts for materials, supplies, equipment, con-
          struction, repair and public works of all kinds,
          it shall be the duty of each board, commission, of-
          ficer or individual charged by law with the responsi-
          bility for the execution of the contract on behalf of
          the state, board, commission, political subdivision,
          agency, school district or a public corporation of
          the state of Montana, to award such contract to the
          lowest responsible bidder who is a resident of the
          state of Montana and whose bid is not more than
          three per cent (3%) higher than that of the lowest
          responsible bidder who is a nonresident of this state.
          In awarding contracts for purchase of products, materials,
          supplies or equipment such board, commission, officer
          or individual shall award the contract to any such
          resident whose offered materials, supplies or equip-
          ment are manufactured or produced in this state by
          Montana industry and labor and whose bid is not more
          than three per cent (3%) higher than that of the
          lowest responsible resident bidder whose offered
          materials, supplies or equipment are not so manufactured
          or produced, provided that such products, materials,
          supplies and equipment are comparable in quality and
          performance. * * *I1
          Section 82-1925, R.C.M. 1947, provides who shall be deemed
resident contractors, the       pertinent part of which provides:
          II
           For the purpose of this act the word 'resident'
          shall include    *
                           * * any individual, partnership
          or corporation, foreign or domestic and regardless
          of ownership thereof, whose offered materials, sup-
          plies or equipment are manufactured or produced in
          this state by industry located in Montana and Montana
          labor shall be deemed to be a resident for the purpose
          of this act. I I
        Section 82-1925.1, R.C.M. 1947, grants authority to the
Department of Revenue to make the initial determination of resident
contractor status:
       "1t shall be the duty of the state department
       of revenue of the state of Montana, at the time
       that a public contractor makes application for a
       license under the provisions of chapter 35, Title
       84 of this code, to determine whether or not such
       contractor is a 1 resident' of the state of Montana
       within the meaning of sections 82-1924 and 82-1925.
       The department shall endorse upon the contractor's
       license whether or not such contractor is a 'resident'
       as aforesaid. If a contractor is not a 'resident'
       at the time such license is issued, but thereafter
       qualifies as such, he may apply to the department of
       revenue for a redetermination of his residency, and,
       if found to qualify as a 'resident,' the department
       shall endorse such fact upon his license, together
       with the date of such qualification. It shall be
       the duty of the state department of revenue, upon
       written request of any board, commission, officer
       or individual charged by law with the responsibility
       for the execution of any contract subject to the
       provisions of section 82-1924 on behalf of the state,
       board, commission, political subdivision, agency,
       school district or public corporation of the state
       of Montana, to furnish a list of contractors who
       have qualified as 'residents,1 as aforesaid, to
       such requesting body. The determination of the
       department of revenue that a public contractor is
       or is not a 1 resident' within the meaning of sections
       82-1924 and 82-1925 shall be prima facie evidence of
       such fact. 1 t
        On January 9, 1973, the Department of Revenue issued a
public contractor's license to Acton.   No determination of residency
was made until October 23, 1973, when the Department of Revenue
issued a certificate of residency based upon the affidavit of Acton,
heretofore quoted, to the effect that it would use Montana products
and materials insofar as they are available and would use Montana
labor except for selected supervisory personnel.
        All other questions aside, the affidavit of Acton simply
does not conform to the statutory criteria authorizing the Depart-
ment of Revenue to certify Acton as a resident contractor. Acton
is a foreign corporation. The only way it can qualify as a resi-
dent contractor is to offer materials, supplies or equipment
"manufactured or produced in this state by industry located in
Montana and Montana labor".   Its affidavit falls far short of
establishing this.   Acton states it will use Montana products and
             It
materials         insofar as they are available".    Who determines their
availability3 What does available mean"             Acton states that it will
use Montana labor I Iexcept for selected supervisory personnel".
What supervisory personnel? FJho selects those to be exempted'
How many employees are involved in the exception? Although the
affidavit must be interpreted reasonably, there are too many loop-
holes to insure that the purpose of the resident contractor pre-
ference law will be fulfilled.         If the affidavit here was suffi-
cient to clothe Acton with resident contractor status, any foreign
corporation or non-resident contractor could qualify for the
preference and the law would be meaningless.
           For these reasons, our judgment of November 21 annulling and
setting aside the certificate of residency and freeing the parties
to proceed thereafter in accordance with law was issued.           There-
after a petition for rehearing was filed by Acton and objections
thereto filed by Sletten. After consideration of same, the petition
for rehearing is denied.

        Mr. Justice Wesley Castles took no part in the foregoing
Opinion.