Gamewell Company v. City of Phoenix, 13635.

• Decision Date: 03 January 1955
• Docket Number: No. 13635.,13635.
• Citation: 216 F.2d 928
• Parties: The GAMEWELL COMPANY, a Corporation, Appellant, v. The CITY OF PHOENIX, a Municipal Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

216 F.2d 928 (1954)

The GAMEWELL COMPANY, a Corporation, Appellant, v. The CITY OF PHOENIX, a Municipal Corporation, Appellee.

No. 13635.

United States Court of Appeals Ninth Circuit.

November 15, 1954.

Rehearing Denied January 3, 1955.

COPYRIGHT MATERIAL OMITTED

Henry E. Foley, Clarence I. Peterson, Lawrence A. Sullivan, Foley, Hoag & Eliot, Boston, Mass., Walter Linton, Mark Wilmer, Snell & Wilmer, Phoenix, Ariz., for appellant.

Richard Fennemore, Walter E. Craig, Fennemore, Craig, Allen & Bledsoe, William C. Eliot, City Atty., City of Phoenix, Phoenix, Ariz., for appellee.

Before BONE and POPE, Circuit Judges, and YANKWICH, District Judge.

YANKWICH, District Judge.

The appellant, a Massachusetts corporation, instituted an action in the United States District Court for the District of Arizona to recover various sums as follows: $7,146.27, $416,984.00, interest upon the sum of $416,984.00, at the rate of six per cent per annum from March 8, 1950, until paid, $24,742.00, conditioned upon appellant causing delivery of cable to appellee, or, if appellee elects not to receive the cable, then, for the sum of $22,873.15, claimed to be due to it from the appellee, the City of Phoenix, under a contract to install a fire alarm system for the total sum of $678,779.00, awarded to appellant on July 25, 1949, which the City had terminated before completion in March, 1950.

A second cause of action sought a declaration of rights, 28 U.S.C. §§ 2201-2202, to determine whether the contention of the City that the contract was void because it provided for 90 per cent instead of 75 per cent progress payments and that there was no compliance with Section 10-610, Arizona Code Annotated, 1939, was correct.

The Answer challenged the sufficiency of the specifications for bids in many respects, and, generally, alleged that the specifications were so drawn that no one but the appellant could enter a competitive bid thereon. It also sought in a counterclaim to recover progress payments made to appellant.

As the allegations of the pleadings have been transmuted into findings and judgment, we are to determine the correctness of the adjudication.

The court gave judgment against the appellant on its causes of action and in favor of the City on the counterclaim for the progress payments made to the appellant in the sum of $287,123.52.

I The Effect of Findings

In this appeal from the judgment, the appellant has challenged the sufficiency of the findings and insists that they are erroneous and unsupported by any evidence in the record and that the court erred, as a matter of law, in awarding judgment to the City on its counterclaim.

The Findings stand before us with the presumption of validity unless they are clearly erroneous. Rule 52(a), Federal Rules of Civil Procedure, 28 U.S.C. The object of the clause as to the effect of findings is to give to findings the effect which they formerly had in equity. United States v. United States Gypsum Co., 1948, 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746. The aim is to

"* * * make allowance for the advantages possessed by the trial court in appraising the significance of conflicting testimony and reverse only `clearly erroneous\' findings." Graver Tank & Mfg. Co., Inc., v. Linde Air Products Co., 1949, 336 U.S. 271, 275, 69 S.Ct. 535, 537, 93 L.Ed. 672.

This advantage has been well stated by the Court of Appeals for the Second Circuit:

"For the demeanor of an orally-testifying witness is `always assumed to be in evidence.\' * * * The liar\'s story may seem uncontradicted to one who merely reads it, yet it may be `contradicted\' in the trial court by his manner, his intonations, his grimaces, his gestures, and the like — all matters which `cold print does not preserve\' and which constitute `lost evidence\' so far as an upper court is concerned." Broadcast Music, Inc., v. Havana Madrid Restaurant Corp., 1949, 175 F.2d 77, 80.

Conversely, the Supreme Court has held that a finding is clearly erroneous when

"* * * although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., supra, 333 U.S. at page 395, 68 S.Ct. at page 542.

To the same effect is United States v. Oregon State Medical Society, 1952; 343 U.S. 326, 339, 72 S.Ct. 690, 96 L.Ed. 978.

Of course, if an erroneous legal conclusion is drawn by a trier of fact, it will be set aside. In re Leichter, 3 Cir., 1952, 197 F.2d 955, 957; Ward v. Deavers, 1952, 92 U.S.App.D.C. 167, 203 F.2d 72, 76; Staunton Industrial Loan Corp. v. Wilson, 4 Cir., 1951, 190 F.2d 706, 709, 710.

As the first ground of appellant's attack on the judgment is the insufficiency of the findings, these preliminary observations will appear important in the course of the discussion. Before considering in detail the objections to the findings, the obvious should be stated that, as this is a diversity case, 28 U.S.C. § 1332, the substantive law of Arizona controls in determining the validity of the contract from the terms of which this litigation springs.

II State or Municipal Law as to Notice

A contention made by the City which, if sustained, would dispose of the litigation, is that the contract is invalid because it required a forty-days notice. Section 10-610, Arizona Code Annotated 1939. The section is reproduced in the margin.¹

It is an elementary principle of long standing of municipal law that where the method of the exercise of the power is prescribed by state or local law, the "mode becomes the measure of the power". 63 C.J.S., Municipal Corporations, § 979, page 532; Zottman v. City and County of San Francisco, 1862, 20 Cal. 96, 102; McCloud v. City of Columbus, 1896, 54 Ohio St. 439, 44 N.E. 95; Potts v. City of Utica, 2 Cir., 1936, 86 F.2d 616, 619; Laurent v. City and County of San Francisco, 1950, 99 Cal. App.2d 707, 708, 222 P.2d 274. This principle is recognized in the law of Arizona. Barron G. Collier, Inc., v. Paddock, 1930, 37 Ariz. 194, 291 P. 1000, 1001-1002; State Board of Control v. Buckstegge, 1916, 18 Ariz. 277, 158 P. 837, 839.

In State Board of Control v. Buckstegge, supra, the principle is stated in this manner:

"The law is well settled that, where the method of exercising powers conferred by statute upon municipal corporations is specifically prescribed, that method must be followed. City of Nevada to Use of Gilfillan v. Eddy, 123 Mo. 546, 27 S.W. 471; Lincoln St. Railway Co. v. City of Lincoln, 61 Neb. 109, 84 N.W. 802; 2 Dillon, Municipal Corporations, §§ 571, 572; City of Ft. Scott, Kan. v. W. G. Eads Brokerage Co., 8 Cir., 117 F. 51, 54, 54 C.A.A. 437. And when any other method than that prescribed is followed, such acts are without jurisdiction and wholly void. City of Ft. Scott, Kan. v. W. G. Eads Brokerage Co., supra."

And when, by statute or city ordinance, certain types of bids are recognized and notice for a definite time is required to be given, a contract entered without such notice is invalid. McQuillin on Municipal Corporations, 3 Ed., 1950, Vol. 10, Sec. 29.26; 63 C.J.S., Municipal Corporations, § 999; Berryhill Office Equipment Co. v. Phillips, 1929, 35 Ariz. 180, 276 P. 4. And where the contract calls for the construction of buildings, the contract must contain all the necessary information or refer to available specifications on file, and the specifications must be on file for the entire period of the notice. Berryhill Office Equipment Co. v. Phillips, supra; Comstock v. Eagle Grove City, 1907, 133 Iowa 589, 111 N.W. 51; Jenkins v. City of Bowling Green, 1932, 251 Ky. 119, 64 S.W.2d 457, 459.

The notice actually given here was eighteen days. It is the contention of the appellant that the matter is governed by Section 2 of Article 19 of the Phoenix City Charter, which requires only five days notice. This contention is based on Section 16-303, Arizona Code Annotated 1939, which provides that when a city has adopted a charter, the charter supersedes any provision in the general law relating to the same matter.

The City contends that because fire protection is a matter of state concern, and because part of the bond issue was for the acquisition of sites and the building of new buildings, the State law requiring forty days notice prevailed. It is the law of Arizona that the provisions of local charters relating to legislation of a general nature must give way to state law when there is conflict between the two. Clayton v. State, 1931, 38 Ariz. 135, 297 P. 1037; American-La France Foamite Corp. v. City of Phoenix, 1936, 47 Ariz. 133, 54 P.2d 258, 259; Luhrs v. City of Phoenix, 1938, 52 Ariz. 438, 83 P.2d 283; City of Tucson v. Arizona Alpha of Sigma Alpha Epsilon, Inc., 1947, 67 Ariz. 330, 195 P.2d 562.

Granted that fire protection is a matter of general state interest, Luhrs v. City of Phoenix, supra, the state provision relating to notice is directed chiefly to bond issues for the "erection and furnishing" of public buildings. And to make such provision applicable to a chartered city would be as illogical as to apply to such cities general statutes relating to notices to sell real estate. This the Arizona Supreme Court has refused to do upon the ground that "a charter city is sovereign in all its `municipal affairs' where it has the power." City of Tucson v. Arizona Alpha of Sigma Alpha Epsilon, Inc., supra, 195 P.2d at page 565.

While the bond issue here contemplated the acquisition of sites and the building of buildings, its major object was to extend the fire protection system of the City, a matter which is more consonant with the local self rule which the Arizona statute recognizes in the case of chartered cities. Sec. 16-303, Arizona Code Annotated 1939. Surely the City of Phoenix having "the power" to establish its own fire protection system should be "sovereign" in the matter of letting contracts for it.

The contract under consideration related to one of the...