Mariano & Associates, P.C. v. Board of County Com'rs of Sublette County, 86-206

• Decision Date: 14 May 1987
• Docket Number: No. 86-206,86-206
• Citation: 737 P.2d 323
• Parties: MARIANO & ASSOCIATES, P.C., a Wyoming professional corporation, Appellant (Plaintiff), v. BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF SUBLETTE, State of Wyoming, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 323

737 P.2d 323

MARIANO & ASSOCIATES, P.C., a Wyoming professional corporation, Appellant (Plaintiff), v. BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF SUBLETTE, State of Wyoming, Appellee (Defendant).

No. 86-206.

Supreme Court of Wyoming.

May 14, 1987.

William H. Twichell and Gerald R. Mason of Mason & Twichell, P.C., Pinedale, for appellant.

John V. Crow, Sublette Co. Pros. Atty., Pinedale, for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

URBIGKIT, Justice.

Adverse summary judgment was granted in a damage-recovery suit by an accounting firm following the Sublette County Board of Commissioners' revocation of the second year of a two-year auditing contract. The significant issue raised was the validity of a governmental contract extending beyond the term of the office of the contracting officials.

I. FACTS

On August 3, 1984, as a negotiated response to an accounting proposal request, appellant, then known as Mariano & Mortensen, P.C., now Mariano & Associates, P.C., submitted a written acceptance letter to perform auditing services for Sublette County for the two fiscal years ending June 30, 1984 and June 30, 1985. By endorsement on the letter, the Chairman of the Board of County Commissioners executed an acceptance on August 24, 1984, confirming a Board resolution entered in the Commission minutes. This Board action had confirmed earlier Board action taken on June 19, 1984:

"The County Commissioners considered the following proposals for county audit: Mariano & Mortensen, P.C., Pinedale, not to exceed $14,000, and Sorensen & Sorensen, P.C., Jackson, not to exceed $12,000. The local firm was given the opportunity to match the low bid, which they accepted, and the commissioners approved their proposal to conduct the 1983-84 fiscal year audit of county funds."

In March of 1985, Mortensen left the accounting firm and uncharitably approached the county officials to secure the second fiscal 1985 accounting contract for himself, as a continuation of the work that he had generally provided in the first year as a member of the contracting accounting firm. The bids were again "negotiated," or "peddled," and he was awarded the remaining one-year contract at a not-to-exceed $10,500 price. The higher-amount existing contract with appellant was terminated; Mortensen was given the new contract; and Mariano sued the county commissioners for a claimed profit for the second year of $12,925. Both plaintiff-accounting firm and the county-defendant filed motions for summary judgment. The trial court granted summary judgment to the county, leaving Mariano where he was--out in the cold.

The litigants present four issues for appellate review. In addition to the principal issue presented of the validity of a contract with a governmental entity which extends beyond the contracting official's term of office, appellant questions whether a contract was actually created, the validity of a governmental contract which extends beyond the fiscal year, and whether a denial of a motion for summary judgment is appealable.

Since our decision on the principal issue is dispositive, we will not pursue discussion on the other issues submitted.

II. WYOMING PRECEDENT

In Hyde v. Board of Commissioners of Converse County, 47 Wyo. 101, 31 P.2d 75 (1934), a one-year contract for a county extension agent involved the period from July 1, 1932 to June 30, 1933. In January, 1933, after the fall election, the county commissioners viewed the county agent service differently, and denied continuing funding to complete the agreed term. This court labored mightily to justify the early termination of that one-year employment agreement. Avoiding any discussion of the governmental-proprietary differential, which was generally the test or pretext of most earlier cases, our court adopted as the controlling principle, the rule as stated in 7 R.C.L. 946, § 21:

" 'In this as in many other instances of seeming conflict, a statement of a positive and inflexible rule either way is not even desirable, for much depends upon questions of duty, expediency, the immediate or reasonable necessities, and other particular circumstances of the case. Under some circumstances the right to legislate prospectively should be upheld, whereas under a different state of circumstances it should be unhesitatingly denied. It is within the range of surmise at least to conceive of a rule in either case that would best be honored in the breach.' " 31 P.2d at 78.

The court then generally approved the facts and circumstance, necessity and benefit test, from a Pennsylvania case, Moore v. Luzerne County, 262 Pa. 216, 105 A. 94 (1918):

" ' * * * [T]he facts and circumstances of each case must be considered in determining it. Ordinarily it is limited in time to the term of the agent who makes it. Necessity, or its equivalent of great advantage to the principal, may furnish a reason for enlargement beyond the term; but he who asserts the existence of the necessity or great benefit has the burden of proving it. This is particularly true of public officials; else those going out of office might so tie the hands of those coming in as to cause serious embarrassment and loss to the public.' [Moore v. Luzerne County, 262 Pa. 216, 105 A. 94, 95.]" 31 P.2d at 79.

With two new county commissioners then elected (probably of a different political party), Hyde's continued employment for the five additional months was found by this court to fall short in proof of the justified facts and circumstances, necessity or benefit test for validation. In discussing the underlying county extension service state legislation, Justice Riner opined:

" * * * In putting the stamp of its approval upon that act, the lawmaking body can hardly have believed that any single county board would be clothed with vision sufficient to unerringly determine in advance what the scroll of the future should be when fully unrolled. Changing conditions frequently require that what is expedient for one year be deemed as quite inexpedient for the following year, in handling county affairs. The difficult and rapidly altering status of business conditions of the people during the past two or three years is an emphatic illustration of our meaning here." 31 P.2d at 79.

The interesting facet is the holding of the case that the county commissioners in 1932 were without legal authority to execute the contract, even though done under a state statute and with a cooperative agreement for the service with the University of Wyoming. Additionally, performance had occurred for seven-twelfths of the fiscal period involved. Not surprisingly, the case was never cited by other state courts as authoritative precedent.

Hyde was followed by MacDougall v. Board of Land Commissioners of Wyoming, 48 Wyo. 493, 49 P.2d 663 (1935). The Board of Land Commissioners entered into a contract with an auditing firm to determine how much the state was being cheated on mineral lease royalty payments. The time being 1933, the contract was contingent upon recovery. A wayfaring taxpayer filed a suit to void the written audit and collection contract. A demurrer to the complaint was sustained by the district judge, and the Supreme Court reversed in rejecting the validity of the agreement. ¹

The strongest objection of the 1935 court to the audit contract was the contingent-fee arrangement which might encourage an officer to neglect his duty, with the further thesis that the executive branch of government was usurping the function of the legislature. However, in addition, Hyde was quoted by the court with approval:

"The general rule is that contracts extending beyond the term of the existing board, thus tying the hands of the succeeding board and depriving the latter of its proper powers, are ordinarily, though not always, void as contrary to public policy. Hyde v. Board [supra]. The contract in question would seem to fall within the condemnation of that rule." 49 P.2d at 666.

For a specifically contrary result, see Denio v. City of Huntington Beach, 22 Cal.2d 580, 140 P.2d 392, 149 A.L.R. 320 (1943), overruled on other grounds sub nom. Fracasse v. Brent, 6 Cal.3d 784, 100 Cal.Rptr. 385, 494 P.2d 9 (1972); Board of Commissioners of Edwards County v. Simmons, 159 Kan. 41, 151 P.2d 960 (1944); De Bow v. Lakewood TP., 131 N.J.L. 291, 36 A.2d 605 (1944).

All of this was not sufficient to settle the nationally pervasive parking-meter litigation of later date, ² as it came to the Wyoming Supreme Court in Town of Lovell v. Menhall, Wyo., 386 P.2d 109 (1963), with trial court determined validity to be affirmed on a two-to-two vote. The written results encompassed three opinions and a divided vote, with the "majority" or confirming action including a declamation of disposition that:

" * * * [D]isposition by an equally divided court of a pending case [is not regarded] as establishing precedent or settling any principles of law." 386 P.2d at 110.

The parking-meter contract was affirmed, and in writing for the affirmative, Justice Gray, with Chief Justice Parker concurring, analyzed the validity beyond term:

"Defendant further contends that the contract is void for the reason that the term thereof extends beyond the terms of the members of the town council executing the agreement and thus is an attempt to bind their successors in the exercise of a police power. The exercise of a police power is, of course, the exercise of a governmental power and generally a municipal body, absent specific legislative authority, may not enter into a contract binding upon the municipality for a time extending beyond the terms of members of the board exercising the power. In this connection we might say that the rule is different if the contract deals with proprietary functions. In those instances, absent restraint by the legislature, a municipal body is free to negotiate contracts binding upon the municipality if such contracts are reasonable in length of time...