Northern Hills Sanitation, Inc. v. Board of Com'rs of City of Lead
| Decision Date | 29 December 1978 |
| Docket Number | No. 12349,12349 |
| Citation | 272 N.W.2d 835 |
| Parties | NORTHERN HILLS SANITATION, INC., Plaintiff and Appellant, v. The BOARD OF COMMISSIONERS OF the CITY OF LEAD, State of South Dakota, and Ronald A. Island, Bolesh Jagodzinski and Daniel E. Callahan, constituting the members of said Board, and Dale R. Erickson, Lead City Auditor, Defendants and Respondents. |
| Court | South Dakota Supreme Court |
William A. Wyman, Rapid City, for plaintiff and appellant.
A. P. Fuller of Kellar, Kellar, Fuller & Amundson, Lead, for defendants and respondents.
This appeal involves the legality of a contract entered into by the City of Lead (Lead) and Northern Hills Sanitation, Inc. (Northern Hills), for the collection and disposal of solid waste. Northern Hills filed this action for a declaratory judgment, and the trial court entered a judgment declaring the contract void. We affirm.
Northern Hills was incorporated in October of 1974 for the purpose of collecting and disposing of solid waste, garbage and refuse. The incorporator of Northern Hills, Walter Taylor, was an officer and director at all times pertinent to this action while serving at the same time as the chief of police of Lead. Taylor operated his garbage collection service in the Spearfish Canyon area and in some of the outlying areas, as well as providing the Lead commercial garbage service. Also at all time pertinent, Ralph Hoggatt was counsel for Northern Hills while serving in the capacity of Lead city attorney.
In November of 1974, a franchise agreement for garbage collection and disposal was discussed between Lead and Northern Hills. The agreement would have given Northern Hills the exclusive right to use Lead city streets and alleys for the purpose of collection and disposal of refuse for a period of ten years. The proposed franchise was embodied in an ordinance which had its first reading before the Board of Commissioners (Commissioners) of Lead. As a result of adverse citizen reaction to the proposed franchise, the ordinance received no second reading and was tabled by the Commissioners.
In January of 1975, the South Dakota Department of Environmental Protection ordered Lead and its Commissioners to implement a new refuse collection and disposal system by June 1, 1975. Pursuant to this pressure, the Commissioners resolved to enter into an agreement with the cities of Deadwood and Central City for a system of solid waste disposal and to advertise for sealed bids for such a system. Advertisements were subsequently published for bids on six different contracts ranging from total collection and disposal of solid waste from residences in all three cities involved through a transfer site to an approved landfill, to collection and disposal of solid waste to the transfer site only or from the transfer site only, to construction of the transfer site only, and to dumping charges in an approved landfill only.
The bid of Northern Hills for the total project was accepted, and the Commissioners decided to enter into a contract with Northern Hills upon the satisfactory negotiation of an agreement between all three cities. Although the city of Deadwood refused to enter into a three-city agreement, the Commissioners entered into a separate contract with Northern Hills for the collection and disposal of Lead's solid waste on March 27, 1975. At the same time, the Commissioners passed an ordinance which amended the existing garbage collection provisions of the ordinances of Lead in order to facilitate the contract with Northern Hills. Prior to this time, the citizens of Lead were provided with garbage collection service by a private contractor who was paid out of Lead's general tax levy. The proposed amending ordinance provided for a direct monthly assessment on residents of Lead for garbage collection service. On May 7, 1975, the amending ordinance was defeated by the citizens of Lead in a special referendum election. The Commissioners operated under the contract and paid Northern Hills for garbage collection services out of the general tax levy until September 30, 1976, at which time the Commissioners passed a resolution declaring the contract void. This resolution was a result of an audit by the South Dakota Department of Legislative Audit which suggested that the contract was void.
Northern Hills initiated the present action seeking injunctive relief from the resolution declaring the contract to be void and praying for a declaratory judgment adjudicating the rights and duties of the parties under the contract. In holding the contract void, the trial court concluded that the contract did not conform to the bid specifications, that the contract was made and an expense incurred for a term of years without the statutorily prescribed preexisting appropriation of public funds therefor, and that officers of Lead, namely the chief of police and city attorney, were individuals personally interested in the contract in violation of statutory proscriptions.
In our review of the trial court's findings and conclusions on appeal, we will presume such findings and conclusions to be correct, and we will not seek reasons to reverse. Lytle v. Morgan, 1978, S.D., 270 N.W.2d 359. We will not set aside the trial court's findings unless they are clearly erroneous. SDCL 15-6-52(a). In applying the clearly erroneous standard of review, the question is not whether we would have made the same findings that the trial court did but whether, on the entire evidence, we are left with a definite and firm conviction that a mistake has been committed. Cunningham v. Yankton Clinic, P.A., 1978, S.D., 262 N.W.2d 508.
Municipalities have the express power to enter into contracts for the collection and hauling of garbage and other waste material. SDCL 9-32-11. Such contracts, however, are subject to the requirement that all public contracts must be awarded only after a competitive bidding procedure to the lowest responsible bidder. SDCL...
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