Iowa Electric Co. v. Town of Cascade

• Decision Date: 21 November 1939
• Docket Number: 45020.
• Citation: 288 N.W. 633,227 Iowa 480
• Parties: IOWA ELECTRIC CO. v. TOWN OF CASCADE et al.
• Court: Iowa Supreme Court

288 N.W. 633

227 Iowa 480

IOWA ELECTRIC CO. v. TOWN OF CASCADE et al.

No. 45020.

Supreme Court of Iowa.

November 21, 1939

Appeal from District Court, Jones County; H. C. Ring, Judge.

Suit to enjoin the construction of a municipal electric light and power plant on the grounds that the proceedings in connection therewith are void. The defense consisted of an assertion that the plaintiff had no right to maintain the suit and further that the proceedings were valid. There was a decree for the defendants. Plaintiff appeals.

Affirmed.

Rex H Fowler, of Des Moines, Don Barnes, of Cedar Rapids, and Edward D. Hogan, of Cascade, for appellant.

Czizek & Czizek, of Dubuque, and E. J. Kean, of Cascade, for appellees.

MILLER, Justice.

This suit is brought by the Iowa Electric Company, a corporation which alleges that it has a franchise for the furnishing of electric current in the Town of Cascade, which will expire May 22, 1940, and that it is a taxpayer in the Town of Cascade. Plaintiff seeks to enjoin the construction of a municipal electric light and power plant, construction of which was approved by the electors of the Town of Cascade at a special election. The cost of improvement was not to exceed $100,000, and was to be paid out of earnings, pursuant to the Simmer law. Code 1935, § 6134-d1 et seq.

The Federal Emergency Administrator of Public Works, upon application by the town, offered to make a grant of 45 per cent of the cost of the project, which offer was accepted. One of the conditions of the grant was that the town establish certain minimum rates of wages to be paid employees engaged upon the project, which rates were to be determined " in accordance with rates prevailing for work of a similar nature in the locality in which the project is to be constructed", and were to be submitted to, examined and approved by the state director. The town adopted a resolution establishing such minimum rates and provided in the specifications for the project, that the wages to be paid such employees should be not less than the rates so fixed. Three contracts were let, each of which obligated the contractor to comply with such provision of the specifications.

Numerous grounds were asserted by the plaintiff in its petition for injunction, but the sole contention, upon which reversal is sought in this court, is that " the adoption by the town council of the minimum wage scale constituted such an interference with free and open competitive bidding upon said project as to render the proceedings void."

There was testimony introduced to the effect that the wage scales paid in the Town of Cascade, were substantially lower than the minimum rates fixed by the specifications. There was also testimony that the town council, in its study preliminary to the fixing of minimum wage rates, determined that the labor supply in Cascade was insufficient to satisfy the needs of the project. There was testimony to substantiate this conclusion. The contractors testified that the schedule of minimum wage rates did not in any manner tend to increase the bids submitted by them, but one of them conceded that the requirement increased the labor bill. It was also shown that the cost of the labor, affected by the schedule, represented 15 to 20 per cent of the total cost of the improvement. We are of the opinion that the trial court properly found for the defendants under the facts herein.

This court has expressly recognized that in this state a municipal corporation possesses only such powers as are conferred upon it by the legislature. In the case of Van Eaton v. Town of Sidney, 211 Iowa 986, 989, 231 N.W. 475, 476, 71 A.L.R. 820, we state: " A municipality is wholly a creature of the Legislature, and possesses only such powers as are conferred upon it by the Legislature; that is, (1) such powers as are granted in express words; or (2) those necessarily or fairly implied in or incident to the powers expressly conferred; or (3) those necessarily essential to the identical objects and purposes of the corporation as by statute provided, and not those which are simply convenient. Dillon Municipal Corporations (5th Ed.) § 237; Clark v. City of Des Moines, 19 Iowa 199, 87 Am.Dec. 423; City of Clinton v. Cedar Rapids & M. R. R. Co., 24 Iowa 455; Heins v. Lincoln, 102 Iowa 69, 71 N.W. 189; State ex rel. White v. Barker, 116 Iowa 96, 89 N.W. 204, 57 L.R.A. 244, 93 Am.St.Rep. 222; State ex rel. County Attorney v. Des Moines C. R. Co., 159 Iowa 259, 140 N.W. 437, 443; Merrill v. Monticello, 138 U.S. 673, 11 S.Ct. 441, 34 L.Ed. 1069."

This court has also recognized that, under the Simmer law, an improvement such as here contemplated should be contracted for on a basis of competitive bidding. In the case of Iowa Electric Light & Power Co. v. Town of Grand Junction, 216 Iowa 1301, 1303, 250 N.W. 136, 137, after quoting Sections 6134-d4 and d5 of the Code, we state: " 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. McQuillin 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."

Appellant cites and relies upon numerous decisions which hold that insertion in the specifications of a minimum wage scale such as here attempted is beyond the power of a city, where the city is obligated to contract on the basis of competitive bidding, because such a provision tends to destroy competitive bidding. However, to intelligently apply the rule of such cases, it is necessary to understand the reasons for the rule.

In the case of Hillig v. St. Louis, 337 Mo. 291, 85 S.W.2d 91, 92, the court states: " In this state it is well settled that charter provisions requiring that contracts for public work be awarded, upon a public letting, to the lowest responsible bidder, are intended to secure free and unrestricted competition among bidders, to eliminate fraud and favoritism, and to avoid undue or excessive cost which would otherwise be imposed upon the taxpayer or property owner. * * * As a corollary to the elementary principle just stated, our courts hold in general that where, in the letting of contracts for public work, restrictions or conditions are imposed upon bidders which tend to increase the cost of the work, such conditions and restrictions are violative of charter provisions requiring that the contract for the work be let to the lowest responsible bidder."

Again in the case of Bohn v. Salt Lake City, 79 Utah 121 8 P.2d 591,...