Best v. City of Omaha

• Citation: 293 N.W. 116,138 Neb. 325
• Decision Date: 22 June 1940
• Docket Number: 30994.
• Parties: BEST v. CITY OF OMAHA ET AL
• Court: Supreme Court of Nebraska

293 N.W. 116

138 Neb. 325

BEST v. CITY OF OMAHA ET AL

No. 30994.

Supreme Court of Nebraska.

June 22, 1940

Syllabus by the Cour

1. Public administrative bodies possess a discretionary power in awarding contracts, in considering the responsibility of bidders, and in determining questions of public advantage and welfare.

2. Where there is a showing that the administrative body, in exercising its judgment, acts from honest convictions, based upon facts, and as it believes for the best interests of its municipality, and where there is no showing that the body acts arbitrarily, or from favoritism, ill will, fraud collusion, or other such motives, it is not the province of a court to interfere and substitute its judgment for that of the administrative body.

3. It is presumed that a public administrative body acts in good faith, with honest motives, and for the purpose of promoting the public good and protecting the public interest.

4. It is not the policy of the law to prevent a public administrative body from properly exercising its discretion in administering the affairs committed to its charge for the best interests of the municipality that it represents.

5. In the absence of controlling legislative or judicial direction, when acting within the limits of the general powers which it possesses, a public administrative body has the power to determine questions of public policy that concern primarily its municipality.

6. In the absence of specific statutory direction, a city council, in the specifications for public works, may permit bidders to propose and fix a time for the completion of the proposed works.

7. Likewise, in such proposals a city council may reserve the right to omit any or all of separate items from the contract for which separate price proposals are asked after the bids are opened and before the contract is awarded.

Appeal from District Court, Douglas County; Rine, Judge.

Suit by Frank C. Best, a taxpayer, against the City of Omaha and others and the Yant Construction Company to have a contract declared void and to enjoin its execution. From a decree enjoining the defendants from proceeding under the contract, the Yant Construction Company appeals.

Decree reversed, and cause dismissed.

Munger & Rhodes, of Omaha, for appellant.

Gaines, McLaughlin & Shoemaker, of Omaha, for Frank C. Best.

Harold C. Linahan, W. W. Wenstrand, Edward Sklenicka, and Alfred Raneri, all of Omaha, for City of Omaha et al.

L. J. TePoel, of Omaha, for Harry Trustin.

King & Haggart, of Omaha, amici curiae .

Heard before SIMMONS, C. J., and ROSE, EBERLY, PAINE, MESSMORE, and JOHNSEN, JJ.

SIMMONS, Chief Justice.

This case presents two questions: Did the specifications for the construction of a sewage treatment plant fail to provide for competitive bidding so as to render void a contract based thereon? Was the contract let to the lowest responsible bidder?

In 1937 the city of Omaha was perpetually enjoined from depositing sewage in certain creeks in the city. By stipulation the decree was stayed until October 1, 1939, upon the condition that the city should construct a suitable disposal plant. A site was acquired and between 1937 and 1939 work was done on sewer construction with assistance furnished by the Works Progress Administration, an agency of the United States, hereinafter referred to as the W. P. A.

With the assistance of its engineers, legal staff, and specially employed sanitary engineers, the city prepared and completed in June, 1939, the plans and specifications for the proposed project and submitted the same for bids. All bids received upon the first proposal were rejected on November 8, 1939, because the city had failed to comply with certain statutory requirements. The plans and specifications were readvertised and bids were received and opened December 5, 1939. On January 2, 1940, the contract was awarded to the Yant Construction Company " with W. P. A. participation" and was executed by the parties on January 9, 1940. The necessary bond was furnished.

Subsequent to the preparation of the plans and specifications, the city, with W. P. A. assistance, began to do some of the work described in the proposals and continued to do so until the contract was executed. A small amount of excavation had been done when the first publication was ordered. A considerable part of the work on two items had been completed when the bids were opened December 5, 1939, and additional work had been done when the contract was let. This resulted in the specifications calling for the contractor to bid on more work on a unit basis than he actually would be called upon to perform (the contractor being paid for only the unit work he performed). The amount of work which the city had completed at the date the bids were received was known to all bidders.

The city has secured an allotment for W. P. A. assistance on this project. It is conceded that this is not a binding obligation upon the federal government, that it may be withdrawn at any time, that, in any event, the commitment expires July 1, 1940, unless the project is underway, and that " with W. P. A. participation" a material saving can be made in the cost of this project to the city.

Plaintiff, as a taxpayer, seeks a decree declaring the contract void and enjoining its execution on grounds hereinafter set out and considered.

The trial court found that the plans and specifications did not afford an opportunity for competitive bidding, held the contract to be null and void, and enjoined the defendants from proceeding under it. The Yant Construction Company appeals.

The following facts enter into a decision of the questions presented: There is no evidence of bad faith, lack of good faith, of fraud, collusion, arbitrary or capricious action, violation of trust, or abuse of discretion on the part of the city officials or the construction company. There is no charge of collusion on the part of any or all of the bidders. All bidders had the same opportunity to bid, all knew all of the facts relating to the plans, specifications, and conditions of the work. No bidder asked for a clarification or interpretation of the plans and specifications. All submitted bids on the alternative proposals, and the conditions and provisions were applied alike to all bidders. The city was required to expedite the completion of this project by (1) the injunctive order which had become final; (2) its obligation to remove a public nuisance and protect the health and property of its citizens; (3) its desire to have W. P. A. participation both as a matter of saving cost to its tax payers and furnishing employment to its unemployed. It was to the advantage of the city and its citizens that the W. P. A. work being done prior to the execution of the contract should continue without hinderance or interruption.

The following general principles control the questions presented.

(1) Public administrative bodies possess a discretionary power in awarding contracts, in considering the responsibility of bidders, and in determining questions of public advantage and welfare.

(2) Where there is a showing that the administrative body, in exercising its judgment, acts from honest convictions, based upon facts, and as it believes for the best interests of its municipality, and where there is no showing that the body acts arbitrarily, or from favoritism, ill will, fraud, collusion, or other such motives, it is not the province of a court to interfere and substitute its judgment for that of the administrative body. State v. Board of Commissioners, 105 Neb. 570, 181 N.W. 530.

(3) It is presumed that a public administrative body acts in good faith, with honest motives, and for the purpose of promoting the public good and protecting the public interest.

(4) It is not the policy of the law to prevent a public administrative body from properly exercising its discretion in administering the affairs committed to its charge for the best interests of the municipality that it represents.

(5) In the absence of controlling legislative or judicial direction, when acting within the limits of the general powers which it possesses, a public administrative body has the power to determine questions of public policy that concern primarily its municipality.

That the city has express statutory authority to construct the proposed works subject to the requirement that the contract must be awarded to the " lowest responsible bidder" is conceded. Comp.St. Supp. 1939, sec. 18-1407.

The object of the statute is ...