Johnson Cnty. Sav. Bank v. City of Creston

Decision Date23 June 1930
Docket NumberNo. 39746.,39746.
PartiesJOHNSON COUNTY SAV. BANK ET AL. v. CITY OF CRESTON ET AL.
CourtIowa Supreme Court

OPINION TEXT STARTS HERE

Appeal from District Court, Union County; H. H. Carter, Judge.

Suit in equity by a paving contractor, and its assignee, against the city of Creston and its officials and others, to recover the contract price for repairing pavements under four several contracts, and alternatively for a peremptory writ of mandamus to compel defendants to take the necessary proceedings for the issuance of the proper obligations “representing the amount due plaintiffs under the contracts” and for obtaining liens upon abutting and adjacent property. Plaintiffs by amendment added another count by which they sought to recover the equivalent of the contract price as the reasonable fair value of the material and labor furnished. This amendment was stricken on motion assigning as ground therefor that the amendment set up a cause of action at law in a suit in equity to which the city would be the only proper party defendant and that the allowance of the amendment would result in a misjoinder of causes of action and parties defendant. For more complete statement of the facts, see Jackson v. Creston, 206 Iowa, 244, 220 N. W. 92. Decree for defendants. Plaintiffs appeal.

Affirmed.

FAVILLE, STEVENS, and GRIMM, JJ., dissenting.Kelly, Shuttleworth & McManus, of Des Moines, W. H. Bailey, of Iowa City, and R. Brown, of Creston, for appellants.

George A. Johnston and Kenneth H. Davenport, both of Creston, for appellees.

MORLING, C. J.

Jackson v. Creston, 206 Iowa, 244, 220 N. W. 92, involving the same facts, was successfully maintained by lot owners to cancel special assessments for the work here involved. By the present suit the contractor and its assignee are endeavoring to establish a corporate liability against the city, first upon the contracts and alternatively for the alleged value of the work done under the contracts. By each of the four contracts involved the plaintiff contractor agreed to furnish and apply to the wearing surface of streets coatings of bituminous oil for the agreed consideration of 50 cents per square yard, which the city agreed to pay with the reserved right to assess the cost against benefited property and to issue bonds.

[1] Defendants contend that there was in reality but a single contract for all of the work specified in the four, and that formal division was made into four contracts for the purpose of evading the requirements of the budget law by which the governing body of the city before entering “into any contract for any public improvement to cost $5,000 or more” is required to adopt plans and specifications, propose form of contract, give notice, and hear objections if any are made. Code 1927, §§ 352, 353. By section 351, “The words ‘public improvement’ as used in this chapter shall mean any building or other construction work to be paid for in whole or in part by the use of funds of any municipality.” It seems to be assumed in argument here that the work in question is “building or other construction work.” There is a distinction between “construction work” and “repairs.” Fuchs v. Cedar Rapids, 158 Iowa, 392, 139 N. W. 903, 44 L. R. A. (N. S.) 590;Ellyson v. Des Moines, 179 Iowa, 882, 162 N. W. 212;Farraher v. Keokuk, 111 Iowa, 310, 82 N. W. 773. The consequences of holding such work as that sued for to be or not to be “building or other construction work,” within the meaning of the budget law, might be very serious and far-reaching, and we prefer not to pass on the question until it is fairly presented and argued.

[2] The trial court, among other grounds for its decision, held that the contracts were in contravention of the statute requiring such work to be let on competitive bidding. Plaintiffs apparently assume that such statute applies only to special assessment proceedings and not to contracts by which the city binds itself to pay. We have not the benefit of an argument by appellee upon this question.

Section 6004, Codes 1924, 1927, section 19, 40th Ex. G. A. S. F. 169, commands:

“All contracts for the construction or repair of street improvements and for sewers shall be let in the name of the city to the lowest bidder by sealed proposals, upon giving notice by two publications in a newspaper published in said city, the first of which shall be not less than fifteen days before the date set for receiving bids, which notice shall state as nearly as practicable the extent of the work, the kinds of materials for which bids will be received, when the work shall be done, the terms of payment fixed, and the time the proposals will be acted upon. If there be no such newspaper, such notice shall be given by posting the same in three public places within the limits of such city.”

This section is found in chapter 308, Codes 1924, 1927, as to which appellants say “the various steps required by the chapter are necessary only when it is proposed to assess all or a part of the cost against private property.” The section originated in section 813, Code 1897, and previous Codes. Section 813 was contained in chapter 7, title 5. This division into sections, chapters, and titles was made by the Legislature. By section 832 in that chapter the cost of the repair of any street improvement might be paid from the city improvement fund or the general revenue. Section 813, Code 1897, did not require contracts for repairs to be let on competitive bidding. The requirement of that section applied only to the making or construction of street improvements and sewers. The extension of the provisions of section 813 to contracts for repairs was effected by the codifying act 40th Ex. G. A. S. F. 169, § 19. Nor did the provisions for assessment against benefited property under chapter 7, title 5, Code 1897, extend to repairs. Ellyson v. Des Moines, 179 Iowa, 882, 891, 162 N. W. 212;Fuchs v. Cedar Rapids, 158 Iowa, 392, 139 N. W. 903, 44 L. R. A. (N. S.) 590. We are unable to hold that all the provisions of chapter 308, or of the corresponding chapter of the Code of 1897, or of the codifying act of the Fortieth Extra General Assembly, apply only to special assessment proceedings, and we discover no reason for limiting the requirements of section 6004 to contracts in special assessment proceedings.

[3][4][5][6] The contracts in controversy were entered into without submission to competitive bidding. The statute is peremptory that, “All contracts for the construction or repair of street improvements and for sewers to let in the name of the city to the lowest bidder by sealed proposals upon giving” prescribed notice. The statute is a prohibition upon letting such contracts in any other mode. Des Moines v. Gilchrist, 67 Iowa, 210, 25 N. W. 136;District Township v. Dubuque, 7 Iowa, 262, 276;Coggeshall v. Des Moines, 78 Iowa, 235, 41 N. W. 617, 42 N. W. 650;Ebert v. Short, 199 Iowa, 147, 152, 201 N. W. 793. While the statute is not that the repairs shall be by contract, but says that “all contracts for the construction of street improvements” shall be let by competitive bidding, yet the city undertook to have the repairs in question made by contract. Having undertaken to have them made by contract, it was required to let the contract on competitive bidding. Dickinson v. Poughkeepsie, 75 N. Y. 68. It is a general principle that a municipal contract entered into in violation of a mandatory statute, or a contract in opposition to public policy, is not merely voidable but void (Coggeshall v. Des Moines, 78 Iowa, 235, 41 N. W. 617, 42 N. W. 650), and that no contract for services rendered or goods furnished pursuant thereto can be implied, nor may the acceptance of benefits thereunder be made the basis of a liability by estoppel. Reichard v. Warren County, 31 Iowa, 381;Cedar Rapids Water Co. v. Cedar Rapids, 118 Iowa, 234, 253, 91 N. W. 1081;Langan v. Sankey, 55 Iowa, 52, 54, 7 N. W. 393;Barngrover v. Pettigrew, 128 Iowa, 533, 104 N. W. 904, 2 L. R. A. (N. S.) 260, 111 Am. St. Rep. 206;Cole v. Brown-Hurley Co., 139 Iowa, 487, 117 N. W. 746, 18 L. R. A. (N. S.) 1161, 16 Ann. Cas. 846;McPherson v. Foster, 43 Iowa, 48, 22 Am. Rep. 215;Citizens' Bank v. Spencer, 126 Iowa, 101, 105, 101 N. W. 643;Iowa Electric Co. v. Winthrop, 198 Iowa, 201, 198 N. W. 14;Stropes v. Board of Com'rs, 72 Ind. 42;Peck-Williamson Co. v. Steen School Township, 30 Ind. App. 637, 66 N. E. 909;Worrell Mfg. Co. v. Ashland, 159 Ky. 656, 167 S. W. 922, 52 L. R. A. (N. S.) 880;Eaton v. Shiawassee County (C. C. A.) 218 F. 588;Van Buren Light & Power Co. v. Inhabitants of Van Buren, 118 Me. 458, 109 A. 3; 43 C. J. 248; 44 C. J. 120, 138; 3 McQuill. Mun. Corp., § 1164; Strickler v. Consolidated School District, 316 Mo. 621, 291 S. W. 136, 50 A. L. R. 1287;Carter v. Reynolds County, 315 Mo. 1233, 288 S. W. 48;Carter v. Bradley County Road Improvement District, 155 Ark. 288, 246 S. W. 9;Gaddis v. Barton School Township (Ind. App.) 164 N. E. 499.

[7][8][9] Municipal corporations are the creatures of the Legislature. They have such powers to contract, and only such powers, as the Legislature grants to them. When the Legislature withholds power to contract, or permits the exercise of the power in a given case only in accordance with imposed restrictions, the corporation may no more bind itself by implied contract than by the forbidden express contract. All persons dealing with a municipal corporation are charged with notice of the limitations upon its power. Those limitations may not be exceeded, defeated, evaded, or nullified under guise of implying a contract. A municipal contract let without competitive bidding, when the statute requires competitive bidding, is void, and no recovery may be had either upon the purported express contract or upon an implied contract to pay the reasonable value of the services or material furnished thereunder. Weitz v. Independent District, 79 Iowa, 423, 44 N. W. 696;Zottman v. San Francisco, 20 Cal. 96, 81...

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