Harris v. Philadelphia

• Decision Date: 18 May 1925
• Docket Number: 318
• Citation: 129 A. 460,283 Pa. 496
• Parties: Harris, Appellant, v. Philadelphia et al
• Court: Pennsylvania Supreme Court

129 A. 460

283 Pa. 496

Harris, Appellant, v. Philadelphia et al

No. 318

Supreme Court of Pennsylvania

May 18, 1925

Argued April 15, 1925

Appeal, No. 318, Jan. T., 1925, by plaintiff, from decree of C.P. No. 1, Phila. Co., March T., 1925, No. 4869, dismissing bill in equity, in case of Carl J. Harris v. City of Philadelphia, W. Freeland Kendrick, Mayor, Henry E. Ehlers Director of City Transit, and Keystone State Construction Co. Affirmed.

Bill for injunction. Before BARTLETT, P.J., McDEVITT and TAULANE JJ.

The opinion of the Supreme Court states the facts.

Bill dismissed. McDEVITT, J., dissented. Plaintiff appealed.

Error assigned was, inter alia, decree, quoting it.

The decree of the court below is affirmed, at appellant's costs.

Walter Biddle Saul, of Saul, Ewing, Remick & Saul, with him Roberts & Montgomery, for appellant. -- The municipality, or the municipal official receiving the bids, has the right to waive the irregularity, permit the correction of the irregularity, or, if he believes the interests of the municipality require it, disregard it: Zimmerman v. Miller, 237 Pa. 616; Smith v. City, 2 Brewster 443; Front Drive Motor Co. v. Pittsburgh, 63 Pitts L.J. 409; Kerr & Sons v. Board of Education, 25 Pitts. L.J. (N.S.) 54.

The bid of Cranford and associates complied in fact with the terms of the ordinance: People ex rel. v. McDonough, 173 N.Y. 181; Faist v. Hoboken, 72 N.J.L. 361.

Joseph P. Gaffney, City Solicitor, with him James Francis Ryan and Ernest Lowengrund, Assistant City Solicitors, for appellees. -- A contract cannot be entered into without a strict adherence to the statutes and ordinances: Phila. v. Pittsburgh, 253 Pa. 147; Smith v. Phila., 17 Pa. Dist. R. 231; Carpenter v. Boro., 208 Pa. 396; Parker v. Phila., 16 Pa. Dist. R. 740; Hinkle v. Phila., 214 Pa. 126; Smith v. Phila., 227 Pa. 423; Flinn v. Phila., 258 Pa. 355; McManus v. Phila., 201 Pa. 632; Smart v. Phila., 205 Pa. 329; Union Paving Co. v. Phila., 263 Pa. 577; Louchheim v. Phila., 218 Pa. 100; Ryan v. Ashbridge, 10 Pa. Dist. R. 153; Wiggins v. City, 2 Brewster 444.

Before MOSCHZISKER, C.J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.

OPINION

MR. JUSTICE FRAZER:

The City of Philadelphia, through its Department of City Transit, advertised for bids for the construction of a section of the Broad Street subway, the attention of bidders being called to an ordinance of the City of Philadelphia requiring all bids to be accompanied by a certified check for 5% of the total amount of the bid. Six bids were received and when opened it was discovered the lowest was $16,749,936, and the next highest $16,863,436.75, a difference of approximately $113,500. It was found, however, that the check accompanying the lowest bid was for $825,000, or about $12,500 short of the amount necessary to make 5% of the total. The bidder's attention was called to the shortage with a request that he submit an additional check to cover the deficiency, and was also informed the department could take no final action as to the legality of the procedure, as the matter must be referred to the city solicitor. An additional check for $25,000 was deposited the same day. The city solicitor subsequently advised the director of the department that, since the bid was not accompanied by the certified check in the required amount, it could not be considered in awarding the contract and any negotiations with a bidder, entered into after the opening of bids, was illegal. Plaintiff, as a taxpayer of the City of Philadelphia, subsequently filed the present bill to enjoin the director from rejecting or refusing to consider the lowest bid because of the irregularity connected with the deposit. An answer was filed and testimony taken before one of the three judges of the common pleas court in which the proceedings were brought, who awarded the injunction enjoining the director of transit from rejecting the bid and directing that a decree be so drawn as to permit the director to accept the bid if in his discretion he believed it for the best interest of the city so to do. On argument of exceptions before the court in banc, the decree was reversed by a majority of two to one and the bill dismissed. This appeal from the decree in favor of the City of Philadelphia and its director of city transit followed.

The shortage in the check was apparently due to the failure of the bidder to include in his aggregate the principal sum of an item in the specifications known as the "force account" amounting in all to $300,000. While it has been argued that this item was merely an incident to the contract and the failure to include it therefore no ground for rejecting the bid, there is no merit in this contention in view of the evidence that the force account item of the bid was intended to furnish a means for payment for work that may be found necessary but which was not of a class covered by unit prices and payment for which would be based on actual cost for material, labor and liability insurance, plus a fixed percentage to cover expense or superintendence and the use of tools and plant, and in further view of the fact that the information to bidders stipulated "the aggregate of the bid upon which the certified check is based is obtained by applying the unit prices bid to the assumed quantities stated hereinafter, including the force account item (principal sum plus the percentage bid)." Under the circumstances, we can see no reason for distinguishing between this item and the others of the contract. The work to be done under this clause is as important as any other part of the contract and in this case the item is a substantial one, amounting as it does to $300,000. We consequently have presented for consideration the question whether, under an ordinance requiring a bid to be accompanied by a certified check for 5% of the total amount of the bid, the director of city transit may, after the bids are opened but before the award is made, accept an additional check to make up a shortage in the amount and proceed to consider the bid as having been properly submitted.

The gist of appellant's argument is that the irregularity was, at most, a technical one; that the purpose of the deposit was merely to show good faith, and guarantee that the bidder, if successful, would enter into a formal contract or forfeit the deposit or so much of it as was necessary to reimburse the city for the difference between the amount of the bid and the actual cost of doing the work; that the check of $825,000 originally deposited was ample for this purpose, inasmuch as the difference between the lowest bid and the next higher was merely $113,500; and that the city should not, because of a technicality, be deprived of the opportunity to save the taxpayers a large sum of money. In other words, they claim the provisions of the statutes and ordinances were substantially complied with and the director should have been permitted to exercise discretion in the matter. On the other hand, it is contended on behalf of appellee that the failure to comply with the requirement as to the amount of deposit was not merely a technical irregularity, but a failure to follow a mandatory provision of the city ordinance, and to permit the director of transit to exercise a discretion, and make changes or accept amendments of settlements or enter into negotiations with bidders after the bids were opened, would permit fraud and favoritism in the awarding of contracts and convert the statutory protection of taxpayers into a method whereby their money might be improperly or fraudulently used.

The Act of May 23, 1874, P.L. 230, section 6, provides that all work and materials required by the city "shall be performed and furnished under contract to be given to the lowest responsible bidder under such regulations as shall be prescribed by ordinance, and it shall be the duty of councils forthwith to enact such ordinances." Conforming to this provision, the City of Philadelphia enacted an ordinance dated July 2, 1924, amending and repealing earlier ordinances and providing as follows: "Section 1. The council of the City of Philadelphia ordains, That every advertisement for proposals for work to be done or materials to be furnished for or on behalf of the city shall state the requirements that all bids must be accompanied by a certified check on a responsible bank or trust company in favor of the city to the amount of five per centum of the sum of such bid. Should the successful bidder refuse or omit to enter into the contract when so required, such check, or so much thereof as may be necessary to reimburse the city for the difference between the amount of the said bid and the actual cost to the city of the doing of the work or furnishing the material, together with any other costs that may be incurred by the city, shall be forfeited to and become the property of the city." Pursuant to the above ordinance, the advertisement for bids contained a notice that "No bid will be considered unless accompanied by a certified check on a responsible bank or trust company in favor of the City of Philadelphia, to the amount of five (5) per centum of the sum of such bid, in accordance with the provisions of an ordinance approved March 7, 1924, as amended by ordinance approved July 2, 1924, and reprinted in full in the specifications." The plans and specifications forming the basis for bids contained the following relevant terms: "4. Informal Proposal. -- A proposal which is incomplete, obscure, conditional, or unbalanced, or which contains alterations, erasures, additions not called for or irregularities of any kind, or in which the proposed surety is not named, may be rejected as informal. A proposal which is not accompanied by the required...