City of Susanville v. Lee C. Hess Co.

• Decision Date: 02 December 1955
• Court: California Supreme Court
• Parties: CITY OF SUSANVILLE (a Municipal Corporation), Petitioner and Respondent, v. LEE C. HESS COMPANY (a Corporation), Defendant and Appellant; Ann Rathner, as City Clerk, etc., et al., Cross-Defendants and Respondents. Sac. 6576.

Page 520

290 P.2d 520

45 Cal.2d 684

CITY OF SUSANVILLE (a Municipal Corporation), Petitioner and Respondent, v. LEE C. HESS COMPANY (a Corporation), Defendant and Appellant Ann Rathner, as City Clerk, etc., et al., Cross-Defendants and Respondents.

Sac. 6576.

Supreme Court of California, In Bank.

Dec. 2, 1955.

Clewe, Blade & McDonald and Robert W. Anderson, Oroville, for appellant.

Donald P. Cady, City Atty., Susanville, Sturgis, Den-Dulk, Douglass & Henes and Eugene K. Sturgis, Oakland, for respondents.

Richard C. Waltz, City Atty., Beverly Hills, Archie L. Walters, City Atty., Burbank, Grayson Price, City Atty., Chico, Thomas F. McBride, City Atty., Concord, Donald A. Stewart, City Atty., San Diego, Donald H. Smith, City Atty., Seaside, C. M. Ozias, City Atty., Fresno, Leo R. B. Henrickson, City Atty., La Mesa, Allen Grimes, City Atty., Modesto, John W. Collier, City Atty., Oakland, Hilton W. Melby, Asst. City Atty., Oakland, Karl Brooks, City Atty., Petaluma, J. F. DuPaul, City Atty., San Diego, and John A. Nejedly, Walnut Creek, as amici curiae on behalf of respondents.

McCOMB, Justice pro tem.

This cause was transferred to this court after decision by the District Court of Appeal, Third Appellate District. Upon further examination of the record, we adopt the opinion of Mr. Presiding Justice Van Dyke, with such omissions and additions as hereinafter appear, as and for the decision of this court. As modified, it reads (285 P.2d 1008):

'The City of Susanville adopted a resolution of intention to do certain public work within its boundaries, proceeding under the Improvement Act of 1911, now contained in Division 7, Part 3, of the Streets and Highways Code, § 5100 et seq. All prescribed action was duly taken, up to and including a call for bids, and Lee C. Hess Company, a corporation, submitted the lowest bid. The city council passed a resolution declaring Hess Company to be the lowest responsible bidder and awarding to it the contract for doing the work. Four days later, and acting upon mistaken advice by the Assistant Director of the Department of Professional and Vocational Standards that Hess Company was not a properly licensed contractor, the city council held a special meeting attended by all its members, but without any notice to Hess Company, and thereat passed a resolution declaring that Hess Company had not been qualified to bid the work and purporting to award the contract to one Katsaros, a bidder whose bid had been next lowest to that of Hess Company.

'In this case the trial court found that the Hess Company had been properly licensed at all material times. The first resolution awarding the contract to Hess Company directed, as required by the statute, that the city clerk publish notice of that award, but no notice was published. The second resolution directed the publication of notice of award to Katsaros, and that publication was made, and a proposed formal written contract was delivered to Katsaros. At this point, and before the formal contract was executed by Katsaros, the city began this action under the provisions of chapter 10 of said division 7 of said Streets and Highways Code, to determine the validity of proceedings theretofore taken. The code provides that at any time after bids have been received, and prior to the date fixed for the beginning of the work, the legislative body conducting the proceedings may bring an action in the superior court to determine the validity of the proceedings and the validity of any contract entered, or to be entered into pursuant thereto. Any contractor to whom a contract has been awarded may also bring the action. The action is declared to be in the nature of a proceeding in rem and anyone interested is given the right to appear and 'contest the validity of such proceedings and contract or uphold the same.' (§ 5268.) Hess Company answered the city's petition, asserting that the contract had been awarded toi it and declaring its willingness to enter into the formal written contract in accordance with the award. It asked that the legislative body and other city officials be mandated to recognize it as the contractor for the work and to proceed to deal with it in that capacity. The trial court found in favor of the city, declaring all proceedings taken to be valid, including the second resolution which, in effect, rescinded the prior resolution awarding the contract to Hess Company and adjudging that a contract executed by the city and Katsaros would be a valid contract. All relief asked by Hess Company was denied. From that judgment Hess Company has appealed.

'In support of its appeal Hess Company contends that when the city council made the award to it a binding contract between the city and the Hess Company arose; that the city's power to act further in the matter of making an award had been exhausted and that its action rescinding the award was a nullity. It contends further that the meeting at which the second and rescinding resolution was passed was an illegal meeting in that it was not held at the city hall as prescribed by law. Before examining these contentions we will consider the claim of the city that Hess Company lost all right it might have had to object to the rescinding action taken by the council or to litigate the issue of the validity of the city's proceedings because it had never appealed to the city council, that it to say, had not exercised its right to administrative remedies which the city contends was afford it by the relevant statutes. The contention cannot be sustained.

'It is, of course, well settled that where an administrative remedy is provided by statute relief must be sought from the administrative body and the remedy exhausted before the courts will act; and that a court violating the rule acts in excess of jurisdiction. (Abelleira v. District Ct. of Appeal, 17 Cal.2d 280, 292, 109 P.2d 942, 132 A.L.R. 715.) It is equally well settled that where a statute provides an administrative remedy and also provides an alternative judicial remedy the rule requiring exhaustion of the administrative remedy has no application if the person aggrieved, and having both remedies afforded him by the same statute, elects to use the judicial one. (Scripps Memorial Hospital, Inc., v. California Emp. Comm., 24 Cal.2d 669, 673, 151 P.2d 109, 112, 155 A.L.R. 360.) * * *'

In the present case judicial and administrative remedies were granted the Hess Company in the alternative. Section 5003 of the Streets and Highways Code, relied on by the city, reads as follows: 'This division shall be liberally construed in order to effectuate its purposes. No error, irregularity, informality, and no neglect or omission of any officer, in any procedure taken under this division, which does not directly affect the jurisdiction of the legislative body to order the work or improvement, shall avoid or invalidate such proceeding or any assessment for the cost of work done thereunder. The exclusive remedy of any person affected or aggrieved thereby shall be by appeal to the legislative body in accordance with the provisions of this division.' This section is inapplicable to the present case as will be seen from the following analysis of that section and various other sections of the Streets and Highways Code:

(a) Section 5003 is substantive, not a procedural provision. It grants a right but provides for no machinery to enforce this right.

(b) Sections 5220, 5258, 5259, 5265, 5266, 5267, and 5268 and purely procedural sections, providing the machinery which section 5003 does not.

(c) Section 5220 provides a remedy for an owner of property liable to be assessed and for no other class of persons. It does not provide for an appeal to the legislative body, but for a written protest.

(d) Section 5221 provides for the disposition of such protests.

(e) Sections 5230 et seq. provide for a change of work or change of assessment boundaries, and nothing else.

(f) Sections 5258 and 5259 are specifically limited by the terms of section 5258 to 'any owner of, or other persons having any interest in, any lot or land liable to assessment * * *.' Section 5258 does not provide for appeal to the legislative body but provides for filing a written notice with the clerk.

(g) Section 5265 provides for the bringing of an action to determine the validity of proceedings by the legislative body.

(h) Section 5266 grants the contractor the same right.

(i) Section 5267 and section 5268 merely provide what the nature of the action is, for publication of summons, and for appearance by any interested person in such action.

(j) The only sections referring to appeal to the legislative body are sections 5366 et seq., and these sections do not become operative until the work or a part thereof has been done or assessment levied.

There is nothing in the act or in any of the cases interpreting the act which provides that the contractor must appeal to the legislative body, except under section 5366.

The statement in Stotts v. Meese, 39 Cal.App. 334, 178 P. 727, relied on by the city, that while there was nothing in the curative section (which is identical with section 5003) in the Vrooman Act which authorized the superintendent of streets to appeal to the city council for the correction of an assessment, nevertheless if the superintendent of streets had appealed, the city council could have corrected the error, was dictum in such case. Actually, the cited case is one wherein a property owner attacked the validity of an assessment, and is therefore not authority for any proposition now presented to us.

Section 5660 of the Streets and Highways Code is also urged as authority for the proposition that the Hess Company may not maintain this action. The section provides that no action, suit, or proceeding with reference to assessment or with reference to review of proceedings, acts, determinations or to questions of validity etc. of assessments, or to enjoin the issuance of...