Nielsen v. City of Saint Paul

• Citation: 88 N.W.2d 853,252 Minn. 12
• Decision Date: 14 March 1958
• Docket Number: No. 37214,37214
• Parties: Paul N. NIELSEN, Appellant, v. CITY OF SAINT PAUL and Northwest Flooring Company, Respondents.
• Court: Supreme Court of Minnesota (US)

Page 853

88 N.W.2d 853

252 Minn. 12

Paul N. NIELSEN, Appellant, v. CITY OF SAINT PAUL and Northwest Flooring Company,

Respondents.

No. 37214.

Supreme Court of Minnesota.

March 14, 1958.

Syllabus by the Court.

1. The awarding of a contract is an administrative act of discretion vested by law in the governing authorities of the city. The courts cannot direct the authorities as to how they shall exercise that discretionary power, nor direct to whom they must let a contract. They may only enjoin them from doing so illegally, which must include an arbitrary, capricious, or unreasonable exercise of power.

2. The charter provisions of the city of St. Paul regulating competitive bidding were designed for the benefit of the city and to protect the public, to make certain, as far as possible, that the taxpayers would be assured of the best bargain for the least money.

3. In the instant case a majority of the committee of city officers charged with the opening of bids under the charter provisions was present as were a number of other representatives from the city's governmental departments. Harmonizing the inconsistency which exists between St. Paul City Charter, §§ 297(c) and 312(a), as we must, we now conclude that the official and committee representation was adequate and that the taxpayers were adequately protected.

4. The ordinances and city charter provisions which apply in the instant case have been adopted for the purpose of procuring genuine bids and responsible parties and are in the main intended for the benefit of the city and in order to prevent frauds upon it; they have not been adopted for the protection of the bidder but for the protection of the city, and it necessarily follows that the city, to some extent at least, has the right to waive irregularities when it is clearly for its benefit to do so and when no damages will be inflicted upon it, or wrong done to others thereby.

5. Northwest Flooring Company, a Minnesota corporation, was in all respects the successor of Northwest Flooring Company, a sole trader, and its execution of the performance contract pursuant to the award to the Northwest Flooring Company as the lowest responsible bidder was binding and valid.

6. Held, the city is protected by a binding performance bond.

Loftsgaarden & Loftsgaarden, St. Paul, for appellant.

Marshall F. Hurley, Corp. Counsel, Robert E. O'Connell, Asst. Corp. Counsel, St. Paul, for City of St. Paul.

Dennis D. Daly, St. Paul, for Northwest Flooring Co.

NELSON, Justice.

Plaintiff brings this action against the city of St. Paul and the Northwest Flooring Company seeking a temporary and permanent injunction to enjoin said company from performing and the city of St. Paul from paying for performance under the terms of a contract entered into between them. A judge of the district court denied plaintiff's motion for a temporary injunction, and the case came on for trial on the merits before another judge of the same court without a jury. Findings and order for judgment were entered in favor of both defendants. Plaintiff moved the court for amended findings or in the alternative for a new trial, the motion was denied, and plaintiff appeals.

Since recital of some of the facts disclosed by the record appears necessary, we do so in the light most favorable to the prevailing party. The plaintiff is a taxpayer and resident of the city of St. Paul engaged in masonry contracting. He is also the executive secretary of the Masonry Contracting Association in the St. Paul area. The action is brought on his own behalf, and that of other taxpayers similarly situated, to set aside the contract involved on grounds that it was illegally entered into. The city of St. Paul is a municipal corporation operating under a home rule charter. The Northwest Flooring Company, prior to entering into the present contract, was an unincorporated company engaged in cement and masonry contracting. Its articles of incorporation under the same name were filed on June 16, 1955. Plaintiff's claim is based upon the allegations that the competitive bidding requirements of the St. Paul city charter were violated and that as a consequence the contract awarded to the Northwest Flooring Company on a bid submitted by it on May 10, 1955, was illegal.

The city, during the month of April 1955, advertised for bids on certain sidewalk work. The published notice calling for bids provided that the bids on the sidewalk contract, designated as formal bid No. 5089, would be received at the office of the purchasing agent, at the City Hall and Court House, room 253, until 2 p.m. Tuesday, May 10, 1955. Four bids were, pursuant thereto, submitted to the city on that date. The evidence produced at the trial is undisputed that Mr. Lyle Kinvig, the city purchasing agent, even though the bids were scheduled to be received at his office, room 253, had decided that his office was not large enough to accommodate all bidders that would appear on the day in question and consequently changed the place for the opening of bids to the county board room on the floor directly above. There is testimony in the record that the proceedings concerned with the opening and reading of bids were commenced from 1 to 5 minutes after 2 p.m. The two trial courts so found and there is evidence in the record to support that finding. There were bids on 13 different prospective contracts scheduled to be opened and considered. Chronological numbers were assigned to the various bids called for. The bids on the sidewalk contract would have been the sixth in order of opening, but, due to the large amount of detail contained in the bids on the sidewalk work, the opening of those bids was ordered delayed until the others had been disposed of. The purchasing agent presided and supervised the opening of bids in the presence of a committee representing his own and other city departments.

The evidence indicates that Thomas Gallivan, who testified for defendant Northwest Flooring Company, had entered the employ of that concern shortly before the date set for the filing and opening of bids. He had been sent as a representative of the company to file its bid at the scheduled time and place for the opening of bids. He had been driven to the city hall by Charles W. Coleman, who then operated the Northwest Flooring Company as sole trader, but had been delayed because Fourth Street was in the process of being repaved. Due to St. Pater Street's being blocked off, Gallivan was forced to leave Mr. Coleman in the car and to run the rest of the way in order to reach room 253 on time. He did not take the elevator but ran up the stairway to the purchasing agent's office, arriving there at approximately 2 p.m. After questioning several persons in room 253, he was finally advised that the meeting had been transferred to the third floor and he went there with all due haste. When Gallivan reached the county board room he got the attention of members of the committee who brought the matter to the attention of Mr. Kinvig, the purchasing agent, and he was thereupon permitted to file the bid on behalf of the Northwest Flooring Company. There is testimony in the record that the bid was so received between 1 and 5 minutes after the hour of 2 p.m. There was other testimony that it might have been as much as 10 minutes after the hour of 2 p.m. While Gallivan was in the process of tendering the bid, it was discovered that the envelope was not then sealed. This was called to his attention, whereupon he immediately sealed it and placed it in the hands of the committee charged with opening bids, after which it took the regular course. The evidence is clear that none of the other sidewalk bids submitted had been opened prior to the submission of the bid on behalf of the Northwest Flooring Company and that none of the bids on the sidewalk project were opened until all other formal bids connected with other projects had been opened and considered by the committee. Only thereafter were all sidewalk bids, including that of the Northwest Flooring Company, opened and considered. The opening of the sidewalk bids occurred a substantial period of time after the Northwest Flooring Company bid had been submitted.

It is not disputed that the Northwest Flooring Company proved to be the low bidder or that it had planned to incorporate when it placed its bid and that the office of the corporation counsel of that city and other city officers were advised of that fact. The evidence discloses that the corporation as organized included Charles W. Coleman and two other individuals who had assisted in operating and financing the Northwest Flooring Company on the project; that the stock was issued to the same individuals; that the property and equipment of the Northwest Flooring Company was transferred to the corporation of the same name; and that it became the owner of the equipment and the assets; and that the sidewalk contract received the full backing of the same individuals including the new corporation, the successor of the unincorporated company.

It was shown at the time of the trial that the project was then nearly one-third completed, the city having paid approximately $23,000 of the full contract figure of $78,664. There was no showing that the work had not been performed to the city's complete satisfaction or that the contract in question had resulted in damage or detriment to anyone.

The plaintiff contends: (1) That the evidence conclusively shows that the Northwest Flooring Company bid was not received until a substantial period of time after 2 p.m. on the date in question and this constituted a violation of the city's charter requirements rendering the award invalid; (2) that the competitive bidding process was invalid because the bids were not opened in the presence of the required officials representing the various city departments; (3) that the contract was not awarded to a corporation in existence at the time the bid was filed...