Griswold v. Ramsey County

• Decision Date: 23 July 1954
• Docket Number: No. 36337,36337
• Citation: 242 Minn. 529,65 N.W.2d 647
• Court: Minnesota Supreme Court
• Parties: GRISWOLD v. RAMSEY COUNTY et al.

Page 647

65 N.W.2d 647

242 Minn. 529

GRISWOLD v. RAMSEY COUNTY et al.

No. 36337.

Supreme Court of Minnesota.

July 23, 1954.

Syllabus by the Court.

1. Although there is such a provision relating to contracts for the purchase of Goods, materials, or supplies, no statutory provision applicable to Ramsey county requires the county board to advertise for bids and to let the contract to the lowest responsible bidder when contracting for the construction of a county jail or any other building.

2. Where a statute speaks with clarity in limiting its application to specifically enumerated subjects its application may not be extended to other subjects by a process of construction since construction lies only in the domain of ambiguity.

3. In the absence of a controlling constitutional, statutory, or charter provision it is generally held that public policy does not demand that a municipal corporation about to enter into a contract for the construction of a public improvement must advertise for bids and let the contract to the lowest responsible bidder.

4. Irrespective of what lawful method is adopted or used in the letting of public contracts, it is for the courts to determine whether officials in the exercise of their discretion have applied the method used in an arbitrary, capricious, or unreasonable manner.

5. Having once adopted the competitive bidding method, the county board was required, as long as that method had not been seasonably abandoned, to pursue such method in a manner reasonably designed to accomplish its normal purpose of giving all contractors an equal opportunity to bid and of assuring to the taxpayers the best bargain for the least money.

6. Generally it is presumed that public officials have entered into public contracts in good faith and actual fraud in a particular instance must be proved, but this rule has no application in a determination of whether the requirements of competitive bidding have been met in the letting of a contract and, as a matter of sound public policy, such a contract is void, without any showing of actual fraud or an intent to commit fraud, if a procedure has been followed which emasculates the safeguards of competitive bidding.

James F. Lynch, County Atty., Robert G. Flynn and Frederick O. Arneson, Asst. County Attys., St. Paul, for Ramsey County, Tony Schmidt, George Moeller, Robert Gibbons and Richard Jansen.

Briggs, Gilbert, Morton, Kyle & Macartney, and Frank J. Hammond, St. Paul, for Hagstrom Const. Co.

Jack C. Foote, St. Paul, for Healy Plumbing & Heating Co.

O. H. Godfrey, Jr., St. Paul, for Kenneth P. Griswold.

Roland J. Faricy, Richard A. Moore, B. Warren Hart, St. Paul, for Alois D. Kennedy, Faricy, Moore & Costello, St. Paul, of counsel.

MATSON, Justice.

Several of the defendants appeal from a summary judgment for the plaintiffs permanently enjoining the defendants from proceeding with the construction of a new jail.

The county board of Ramsey county in November 1952, as part of the 1953 budget, appropriated the sum of $600,000 for the building of a new county jail. Bids were advertised for on the basis of prepared plans and specifications. On August 3, 1953, when all bids were opened, it was discovered that even the lowest bid was considerably in excess of the $600,000 available for the construction of the jail. Consequently all bids were rejected.

A new request for bids was then submitted in which each bidder was asked to state his basic bid and also to indicate to what extent the basic bid would be reduced in the event the county board decided to eliminate certain construction work, such as the finishing of the fourth floor and construction of a tunnel to the courthouse, and further, if the board substituted certain cheaper building materials and equipment or made certain changes in structural design. In addition to these alternative bids directed to a decrease in cost, each bidder was also asked to indicate in what amount the basic bid would be increased if certain alternative items of a more expensive nature were substituted or added. These alternative proposals, by way of either deductions or additions to the basic bid, are for convenience referred to herein as the alternatives.

The request for bids contained the following significant provision:

'The Owner also reserves the right to accept or reject any of the alternate proposals Within six (6) months as outlined in the specifications and as shown on the plans, From the date of the award of the contract, at prices quoted and shown on this proposal form.' (Italics supplied.)

The purpose of the foregoing provision was to enable the county board to bring the construction cost of the jail for the time being within the amount of the funds available. In other words the alternative bids would enable the county board to proceed with the construction of a part of the jail and to complete it later when funds became available.

When the new bids for the general construction, plumbing and heating, electrical, and other work were received on October 5, 1953, Several of the alternative deductions were subtracted from the basic bid in order to arrive at contract figures which did not exceed the money available. The low bidders were determined by first deducting from the basic bids the alternative deductions whereby certain parts of the building were eliminated from the contract. On October 26, 1953, contracts were awarded to defendants Hagstrom Construction Company, Commonwealth Electric Company, and Healy Plumbing and Heating Company in the sum total of $573,370.

By the six-month-delayed-action provision above quoted, the board could within six months after the award require the successful bidders to complete the alternative items which had been deducted at the prices each successful bidder had quoted. It is undisputed that this delayed-action provision or option for finishing and other work was formulated in anticipation of a future appropriation to the jail fund within six months which would permit the board to contract for such remaining work. On November 16, 1953, the budget for 1954 was approved and it contained an additional $210,000 appropriation for the building of the jail.

At this same metting, apparently to forestall the effect of this suit commenced on November 4, 1953, by the plaintiff Kenneth P. Griswold, a taxpayer, to declare the contracts entered into void and to permanently enjoin the defendant county and contractors from proceeding with the work, the board took action to reject all the alternative bids which had been deducted from the successful basic bids. By this action the board abandoned any right or intention to require the successful bidders to complete the alternative items as provided for under the six months' provision above quoted. In short the board sought to defeat the purpose of the Griswold action by asking for new bids on the alternative items.

Another action was then commenced by plaintiff Alois D. Kennedy, another taxpayer, who was permitted to intervene. The defendant county then moved for summary judgment and such procedure was agreed to by all the parties. On December 28, 1953, the trial court ordered judgment in plaintiffs' favor permanently enjoining the defendants from proceeding with the construction of the jail as provided for by the resolutions of the county board. This appeal is from the judgment entered thereon.

1--2. Although there is such a provision relating to contracts for the purchase of Goods, materials, or supplies, no statutory provision applicable to Ramsey county requires the county board to advertise for bids and to let the contract to the lowest responsible bidder when contracting for the construction of a county jail or any other building. L.1949, c. 180; M.S.A. § 375.21, subd. 2. Without any apparent rational basis for making a distinction between the 85 smaller counties and the two larger ones, the legislature has expressly provided that no county with less than 75,000 population, § 375.21, subd. 1, and no county with more than 75,000 and less than 225,000 population, § 375.21, subd. 3, may make a contract for work or labor Or for the construction of buildings without first advertising for bids and awarding the contract to the lowest responsible bidder. Section 375.21, subd. 2, however, which applies only to counties with a population of more than 225,000, expressly requires bids only for contracts for the purchase of Goods, materials, or supplies and makes no mention whatever of contracts for the construction of buildings. This express omission is likewise true of L.1949, c. 180, which applies to counties of more than 300,000 and less than 450,000 inhabitants and apparently was enacted to apply particularly to Ramsey county. L.1951, c. 556, M.S.A. § 392.01 note, applicable to Hennepin county, similarly requires competitive bidding only for the purchase of goods, materials, supplies, and equipment and makes no mention of the construction of buildings. Ridiculous and unreasonable as it is today to permit any municipal body under ordinary conditions, and in the absence of any emergency, to construct large buildings without advertising for bids, the legislature has seen fit to exempt the two larger counties from such requirement. The language of both § 375.21, subd. 2, and L.1949, c. 180, is plain in limiting the competitive-bid requirement to contracts for the purchase of Goods, materials, or supplies, and such language does not by any reasonable standard of interpretation include contracts for Constructing buildings. ¹ The statute is restrictive and should not be extended beyond the language used in it. In Otter Tail Power Co. v. Village of Elbow Lake, 234 Minn. 419, 428, 49 N.W.2d 197, 203, 27 A.L.R.2d 906, a similar distinction was drawn as to the bidding statutes applicable to villages. There the words "supplies and equipment" were held not to cover contracts for work, labor, or services. The same distinction is...