Inman's Inc. v. City of Greenfield
| Decision Date | 12 November 1980 |
| Docket Number | No. 1-280A51,1-280A51 |
| Parties | INMAN'S INCORPORATED, an Indiana Corporation, Plaintiff-Appellant, v. CITY OF GREENFIELD, Indiana, a Municipal Corporation, Defendant-Appellee. |
| Court | Indiana Appellate Court |
Phillip W. Brown, Shelbyville, for plaintiff-appellant.
C. Thomas Billins, Greenfield, for defendant-appellee.
Plaintiff-appellant Inman's Incorporated (Inman) appeals from an adverse judgment by the Hancock Superior Court in an action for money damages for breach of contract against defendant-appellee City of Greenfield (City).
We affirm.
In 1976, City, through its Board of Public Works and Safety, accepted bids for City's gasoline supply for the following year. Inman and Shelby Oil Company (Shelby) submitted the only two bids. Inman's bid was 38.5 cents per gallon for regular gasoline, and 39.5 cents per gallon for unleaded gasoline. Shelby's bid was 41.0 cents and 42.9 cents, respectively. Each bid contained an escalating clause to protect the bidder from unforeseeable rises in the cost of gasoline, including increases in fuel taxes. City contracted with both Inman and Shelby, but was not bound to purchase a specific amount of gasoline from either supplier. Inman concedes that its contract with City was not exclusive and did not contain a provision setting forth a specified amount of gasoline to be sold.
During the contract period, City ordered 17,859.7 gallons of gasoline from Inman, and 26,508.8 gallons of gasoline from Shelby. At all times Inman's selling price to City was lower than Shelby's, sometimes by as much as eight cents per gallon. City does not contend there was a difference in the quality of the product supplied by Inman
and Shelby or that Inman was an unreliable or irresponsible supplier. City considered Shelby's past good services and the existence of the escalating clause as factors in deciding to award contracts for its gasoline supply to both Inman and Shelby. Also, Shelby's place of business was across the street from the fire station, and it had made available a key to the premises so the fire department could obtain gasoline at any time.
Inman contends the trial court's decision is contrary to law, and advances the following proposition: City would never be able to determine, in advance, which bidder actually could provide the lowest gasoline price because of wholesale price fluctuations. Inman's initial, lower price could rise above the price at which Shelby would supply City. For this reason, Inman agrees City was probably correct for accepting both bids. However, Inman argues City, having accepted both bids, was under a duty to award purchase orders to the bidder whose current price was lowest. Inman further argues that Indiana law binds a public body to accept the lowest and best bid, and this policy is incorporated into all public contracts. The failure of City to so uphold the law was a breach of contract, Inman concludes, giving rise to money damages.
Ind.Code 5-17-1-2, the competitive bidding statute, requires a municipal corporation to award contracts for supplies to the "lowest and best bidder." The general rule allows a taxpayer to enjoin public contracts entered into pursuant to competitive bidding where the contract award is arbitrary, corrupt, or fraudulent. It is immaterial whether a taxpayer bringing an action against a municipality was an unsuccessful bidder for a public contract because his legal status as a taxpayer qualifies him to sue.
In School City of Gary v. Continental Electric Company, (1971) 149 Ind.App. 416, 273 N.E.2d 293, this court held that an administrative unit of a municipality is vested with discretionary power to enter into contracts pursuant to competitive bidding, and that it would not disturb the honest exercise of such discretion. In determining whether a bidder is responsible and reliable, administrative agencies consider these factors: ability and capacity, capital, character and reputation, competency and efficiency, energy, experience, facilities, faithfulness, fraud or unfairness in previous dealings, honesty, judgment, promptness, quality of previous work, and suitability to the particular task. If the factors support the determination, courts will not impose their judgment upon responsible administrative agencies. Budd v. Board of County Commissioners of St. Joseph County, (1939) 216 Ind. 35, 22 N.E.2d 973; School City of Gary, supra; Haywood Publishing Company v. West, (1942) 110 Ind.App. 568, 39 N.E.2d 785...
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