Iowa Elec. Light & Power Co. v. Inc. Town of Grand Junction

• Decision Date: 26 September 1933
• Docket Number: No. 42018.,42018.
• Citation: 250 N.W. 136,216 Iowa 1301
• Court: Iowa Supreme Court
• Parties: IOWA ELECTRIC LIGHT & POWER CO. v. INCORPORATED TOWN OF GRAND JUNCTION et al.

216 Iowa 1301

250 N.W. 136

IOWA ELECTRIC LIGHT & POWER CO.

v.INCORPORATED TOWN OF GRAND JUNCTION et al.^a1

No. 42018.

Supreme Court of Iowa.

Sept. 26, 1933.

Appeal from District Court, Greene County; P. J. Klinker, Judge.

This is an action to restrain the town of Grand Junction, its officers, and Fairbanks Morse & Co. from carrying out a contract for the construction of an electric light and power plant for defendant town. By a cross-petition defendants allege that plaintiff's franchise to operate an electric power plant in defendant's town had long since expired; that plaintiff has no legal rights therein; and asks that plaintiff be ousted therefrom. Judgment and decree was entered in favor of defendants. Plaintiff appeals.

Reversed in part; affirmed in part.Donnelly, Lynch, Anderson & Lynch, of Cedar Rapids, Salinger, Reynolds & Meyers, of Carroll, and Graham & Graham, of Jefferson, for appellant.

O. C. Metzger, of Grand Junction, George A. Rice, of Mapleton, and Clark, Byers, Hutchinson & Garber, of Des Moines, for appellees.

KINTZINGER, Justice.

The plaintiff, through its predecessors, acquired an electric light and power plant, and distribution system, in the town of Grand Junction, Iowa. The original franchise to operate the plant and system was granted to one E. A. Caswell in 1894. His rights therein were acquired by plaintiff or its immediate predecessors in 1914. The original franchise expired in 1919. This franchise has never been renewed or extended, and no new franchise has ever been secured by the plaintiff company. The plaintiff company or its predecessors after the expiration of the franchise continued to operate the light plant and system at sufferance.

Defendants contend that plaintiff is occupying the streets, alleys, and public places in the town of Grand Junction without any franchise, license, or authority therefor, and seeks to compel plaintiff to remove its plant and distribution system from the town.

In 1932 the defendant town took steps to purchase a new municipal lighting plant, under the provision of chapter 312 of the Code (section 6127 et seq.).

Plaintiff claims the contract is unconstitutional because the contract would create a municipal debt exceeding its constitutional limit, in violation of section 3 of article 11 of the State Constitution.

Plaintiff also contends that the contract entered into between the town and Fairbanks Morse & Co. is invalid because it was entered into without complying with the statutory provisions requiring competitive bidding.

I. It may be conceded, for the purpose of this case, that all proceedings taken by the town were regular up to the time of receiving bids and letting the contract. It is contended, however, that the contract entered into with Fairbanks Morse & Co. was invalid because there was no competitive bidding; that the bid submitted by that company was based upon its own specifications, and not upon those of the town; that the company's specifications varied so materially from the town's specifications that the bidding was noncompetitive and contrary to statute.

Section 6134-d4 of the Code provides that: “Before any municipality shall enter into any such contract as provided in section 6134-d1, for the establishment of a plant, or for the extension or improvement of an existing plant, to cost five thousand dollars or more, the governing body proposing to make such contract shall give thirty days' notice of its intention to adopt proposed plans and specifications and proposed form of contract therefor, by publication once each week for two consecutive weeks in some newspaper of general circulation in the municipality and also in some newspaper of general circulation in the State of Iowa, the first publication of which shall be at least thirty days prior to the time of hearing fixed in said notice.”

Section 6134-d5 provides: “Such notice shall state as nearly as practicable the extent of the work; the kind of materials for which bids will be received; when the work shall be done; the time when the proposals will be acted upon; and shall also provide for competitive bids for the furnishing of electrical energy, gas, water or heat.” This statute was undoubtedly enacted for the purpose of obtaining competitive bidding and to enable municipal corporations to secure the best bargain for the least money. Such a statute clearly required competitive bidding. McQuillan on Municipal Corp. (2d Ed.) vol. 3, § 1309; Colorado Central Power Co. v. Municipal Power Dev. Co. (D. C.) 1 F. Supp. 961, 965 and 966;Lee v. City of Ames, 199 Iowa, 1342, 203 N. W. 790;Urbany v. Carroll, 176 Iowa, 217, 157 N. W. 852;Rhodes v. Board of Public Works of Denver, 10 Colo. App. 99, 49 P. 430, on page 434; 65 A. L. R. 837 note; Chicago Sanitary District v. McMahon & M. Co., 110 Ill. App. 510.

In the case of Rhodes v. Board of Public Works of Denver, 10 Colo. App. 99, 49 P. 430, on page 434, the court said: “In our opinion, for every purpose of genuine competition between bidders there is and can be no such thing as too great particularity in the description of the subject concerning which competition is invited. In order that bidders may really compete, they must have in mind precisely the same thing. [Italics ours.] It is agreed on all sides that there are several varieties of asphalt, differing in quality, cost, and fitness for paving purposes; and, if a contract for paving with asphalt is to be let, it is necessary to specify the particular kind of asphalt to be used, in order that, in bidding, each bidder shall be on an exact equality with every other bidder.”

In the case of Urbany v. Carroll, 176 Iowa, 217, 157 N. W. 852, 854, a form of contract, together with the plans and specifications, was on file with the city clerk, and bidders were required to use a form provided in bidding. In that case we said: “The authorities agree that there must be a substantial compliance with the proposal to warrant the consideration of the bid, else bidding would not be on equal terms and the advantages of competition lost. Unless the bid respond to the proposal in all material respects it is not a bid at all, but a new proposition.” (Italics ours.)

[1] If the contract entered into with Fairbanks Morse & Co. did not call for a construction of the plant in substantial compliance with the “Town's specifications,” there was no competitive bidding; it was simply a new proposition, and if they were materially different from the town's specifications there would be no competitive bidding, and a contract based thereon would be invalid.

[2] A review of the evidence is necessary to determine whether Fairbanks Morse & Co.'s specifications complied substantially with the town's specifications. The following differences between Fairbanks Morse & Co.'s specifications and the town's specifications are shown by the evidence:

(1) A correct interpretation of the town's specifications clearly shows that they call for a 4-cycle engine, while Fairbanks Morse & Co.'s specifications and contract provide for a 2-cycle engine. The cost of a 4-cycle engine as required by the town's specifications is $13,500, which is 10 per cent. higher than the cost of a 2-cycle engine, specified in Fairbanks Morse & Co.'s contract. The engine called for in the town's specifications would cost over $1,200 more than the engine called for in Fairbanks Morse & Co.'s specifications.

(2) The town's specifications calls for two generators of 170 K. W. each, while Fairbanks Morse & Co.'s contract specified two 155 K. W. generators.

The town's specifications calls for “three phase, 60 cycle, 2300 volts and shall be rated at 185 K. W. or 170 K. W. as the case may be at 80% power factor,” while the generators specified in Fairbanks Morse & Co.'s specifications is 155 K. W. power factor, 80 per cent, 40 cycle, 2,400 volts.

The generators called for in the town's specifications would cost $1,500 more than the generators called for in Fairbanks Morse & Co.'s contract and specifications.

(3) Torsional vibration is a cause for the rejection of an engine unit under the “Town's specifications,” while under Fairbanks Morse & Co.'s contract and specifications only an 8-hour test is required, which is wholly insufficient to demonstrate whether there is such torsional vibration as to warrant rejection or not.

(4) One of the items required in the equipment of the generators called for by the town's specifications is that the generators be equipped with thermometers for determining the temperatures of the generators when operating. This item in the equipment of the generators is omitted in Fairbanks Morse & Co.'s contract and specifications. The cost of the generators with this item included as called for in the town's specifications would be about $295 more than the generators called for in Fairbanks Morse & Co.'s contract without this equipment.

(5) The engine governor required in the town's specifications contemplates what is known as a high-speed centrifugal type of governor, while the governor in the company's specifications is of the inertia shaft type governor.

This difference is that the high-speed governor contemplated in the town's specifications calls for a governor of greater sensitivity and capacity for regulation than the one in Fairbanks Morse & Co.'s specifications. The one specified in the town's specifications would cost more than the one proposed by Fairbanks Morse & Co.

(6) The town's specifications require a compound would exciter, while Fairbanks Morse & Co.'s specifications simply calls for a shunt wound exciter. The compound wound exciter would cost more and is better than a shunt would exciter.

(7) The town's specifications describe in detail the type, kind, manner of construction of the pistons, and material of which they are to be made, while Fairbanks Morse & Co.'s contract and specifications contain no reference thereto. The cost of construction as required by the town's specifications would be...