Herald Pub. Co. v. Klamath News Pub. Co.

• Decision Date: 23 October 1925
• Parties: HERALD PUB. CO. v. KLAMATH NEWS PUB. CO. ET AL.
• Court: Oregon Supreme Court

240 P. 244

116 Or. 62

HERALD PUB. CO. v. KLAMATH NEWS PUB. CO. ET AL.

Supreme Court of Oregon

October 23, 1925

In Bank.

Appeal from Circuit Court, Klamath County; A. L. Leavitt, Judge.

Suit by the Herald Publishing Company, a corporation, against the Klamath News Publishing Company, a corporation, and others. From decree of dismissal, plaintiff appeals. Affirmed.

Coshow and Bean, JJ., dissenting.

Oneill & Irwin, of Klamath Falls, for appellant.

C. F Stone and J. H. Carnahan, both of Klammath Falls, for respondents.

BURNETT J.

By this suit the plaintiff seeks to enjoin the city officers of Klamath Falls and the Klamath News Publishing Company from entering into a contract for the city printing or, if such an agreement has been executed, to prevent any performance thereof. Reduced to its lowest terms, the complaint recites the official capacity of the defendants, the corporate character of the publishing companies, plaintiff and defendant, and certain excerpts from the charter of the city together with a copy of the notice given by the police judge under the direction of the council, calling for bids for the city printing and the publication of legal notices for the year ending December 31, 1925. The complaint says:

"That the plaintiff submitted its bid for said official advertising for said city to be printed in said Evening Herald for the year ending December 31, 1925, and therein said bid proposed to print and publish all headings and subject-matter for each insertion at the rate and price of 5 cents per line, 13 ems 8 point, for said advertising.

"That the defendant Klamath News Publishing Company made its bid for said official advertising to be published in the said Klamath News at the price and rate of 10 cents for each headline for each insertion, and for the subject-matter 5 cents per line to four insertions, and for all subsequent insertions at the price of four and one-half cents per line for each insertion for the subject-matter, the additional sum of 10 cents for each headline for each insertion of said subject-matter and headlines contained in all official advertising matter for said city.

"That said bid of the plaintiff was and is the less price and lowest bid for said advertising in money values than the bid of the defendant Klamath News Publishing Company for like services for said official advertising for said city."

After this, with a tautological rehearsal of the proceedings of the council thereafter, the plaintiff informs us that the council rejected its bid and undertook to pass an ordinance directing a contract to be made with the defendant publishing company. The charter requires that:

"All contracts for official advertising shall be let by the council to the lowest responsible bidder publishing a daily newspaper in the city of Klamath Falls and which has a bona fide circulation therein, providing, however, that the council shall reserve the right to determine such circulation and reject any and all bids."

A further provision is as follows:

"The city of Klamath Falls is not bound by any contract or in any way liable thereon, unless the same is authorized by a city ordinance, and any contract so authorized must be in writing, and be signed by the mayor in behalf of the city, and sealed with the seal of the city, and be attested by the police judge. But an ordinance may authorize the mayor of the city to bind the city without a contract in writing for the payment of any sum of money not exceeding $100."

The defendants demurred to the complaint on the ground that the city of Klamath Falls was a necessary party, and that the complaint did not state facts sufficient to constitute a cause of suit, and the demurrer was sustained; whereupon, the plaintiff standing upon its complaint, the suit was dismissed, and the plaintiff appeals.

Substantially, the plaintiff has pleaded its grievance according to what it conceives to be the legal effect of the bids by saying that its bid was the lowest, coupled with a statement of the two bids according to their tenor. The pleading must be judged according to the latter feature, for, when the pleader sets out the instrument upon which he relies, its construction is for the court, and he gains nothing by adding thereto his opinion of the legal effect of the document. By analogy it is like a complaint pleading a promissory note according to its legal effect, and adding an exhibit as a part of the pleading which consists of a copy of a bond of indemnity conditioned that it would be void in case the obligor performs certain acts. The declaration would be treated then as an action upon a bond and not on a promissory note. So here we have a conclusion, but it is for the court to ignore the conclusion reached by the pleader that its own bid was the cheapest and consider the issue on the bids as stated. In order for the court to determine which bid was in fact the lowest, we must be able to refer them to a common standard for comparison.

We note that the plaintiff's bid was 5 cents per line, of a certain length of line and size of type, for the constant price of 5 cents per line, whether of heading or subject-matter. The bid of the defendant publishing company does not include the length of line nor size of type, and it makes a differential in the rates, bidding 5 cents per line for four insertions of subject-matter, and thereafter for 4 1/2 cents per line for each insertion, and charging the constant rate of 10 cents for each headline. Neither bid takes any account of the number of publications to be contracted for. Applying the rates to an example of a 1 line heading and 20 line subject-matter, of the size of type and length of line mentioned in the plaintiff's bid, the price for four insertions would be 20 cents greater on the defendant's bid than that of the plaintiffs; but for eight insertions the charge of the defendant amounts to the same as that of the plaintiff, and will continually be less thereafter for any number of insertions, while that of the plaintiff will continue at the fixed rate specified in its bid. This leaves out of the consideration a possible difference of length of line and size of type for the bid of the defendant. For aught that appears, the charge for the publication in the defendant's paper, considering length of line and size of type, which are not disclosed, would figure out at a less amount in all cases than that of the plaintiff. In other words, in order to determine the ultimate fact of which is the lowest bid the complaint should allege all the conditions necessarily entering into each bid so that the court could draw the conclusion about which was in fact the least expensive for the service rendered.

The plaintiff counts upon the veto message of the mayor disapproving of the ordinance awarding the contract to the defendants, wherein he recites that he had a computation made by some accountants rechecking the printing of the years 1923 and 1924, which produced a result favorable to the plaintiff. This is pleading what would be the rankest kind of hearsay testimony. It amounts to saying that the mayor told the council that the accountants told him what happened on an entirely different occasion. It could not be evidence under any view of the case.

The complaint is equivalent to propounding the question, which is the cheapest, five hogs or seven sheep? The principle is that there is no mention of certain necessary data to enable the court to determine whether in fact the plaintiffs' bid was lower than that of the defendant.

Besides this, the validity of the contract cannot be rightly adjudicated without the city, as a real party in interest, being brought under the jurisdiction of the court. The circuit court was right in sustaining the demurrer to the complaint, and the decree should be affirmed. It is so ordered.

McBRIDE, C.J., and RAND and BROWN, JJ., concur.

BELT J. (specially concurring).

In my opinion the city of Klamath Falls is an indispensable party to this suit. It is vitally interested in the contract, and cannot be divested of its rights therein without an opportunity to have had its day in court. The fact that plaintiff alleges the contract to be illegal does not alter the rule. Has not the city a right to be heard as to whether it is entering into an alleged illegal contract? Indeed, it is presumed that municipalities, as well as individuals, are fair and honest in business transactions.

The rule is thus stated in 32 C.J. 298:

"Where the property rights or interest of a municipal corporation will be affected in case the injunction asked for is granted, it is generally held that it, as well as the particular officer or officers sought to be enjoined, should be made a party or parties. However, the municipality is not an indispensable party where there is no attempt to divest it of a right or to impose an obligation upon it."

Basham v. Holcombe (Tex. Civ. App.) 240 S.W. 691, was a suit to enjoin the execution of a contract by the city for public improvements for the reason that the city officials did not accept the lowest bid. The court held:

"Although the suit was an effort to restrain the officials of the city from making a contract on its behalf with, and from paying out its money to, a designated person, neither the city itself nor the person affected were made parties, as has been before stated. Under wellsettled authority, both were necessary parties to a proceeding so directly and vitally affecting their interests"--citing many authorities.

In Allison et al. v. Ellis et al. (Tex. Civ. App.) 248 S.W. 814, it was contended, as here, that a municipality was not a necessary party in a suit to enjoin the execution of an alleged invalid contract; but the court said:

"It cannot with any

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