State v. Clausen

• Decision Date: 01 April 1916
• Docket Number: 13098.
• Citation: 90 Wash. 450,156 P. 554
• Parties: STATE ex rel. WASHINGTON PAVING CO. v. CLAUSEN, State Auditor, et al.
• Court: Washington Supreme Court

156 P. 554

90 Wash. 450

STATE ex rel. WASHINGTON PAVING CO. v. CLAUSEN, State Auditor, et al.

No. 13098.

Supreme Court of Washington, En Banc.

April 1, 1916

Original proceedings by the State, on the relation of the Washington Paving Company, for writ of mandamus against C. W. Clausen as State Auditor, and another. Writ issued.

Morris C.J., and Main, Fullerton, and Ellis, JJ., dissenting.

Charles O. Bates, Hayden, Langhorne & Metzger, and Wm. H. Pratt, all of Tacoma, and James M. Head, of Boston Mass., for plaintiff.

W. V Tanner, Atty. Gen., Howard Waterman, Asst. Atty. Gen., John A. Shackleford, of Tacoma, and Glenn Fairbrook, of Olympia, for respondents.

BAUSMAN J.

This is an original proceeding in mandamus here to compel payment for a highway built under a contract let by Pierce county pursuant to 3 Rem. & Bal. Code, § 5879. The plans and specifications, approved by the state highway commissioner, provided that the paving be one of twelve kinds, on all of which bids being called for, and various received, the relator became successful with one called bitulithic. Having long ago completed his work without payments, he alleges that the state highway commissioner actually though not formally accepted his work, has no just objections, and unreasonably withholds his certificate. Testimony on both sides is before us on an order of reference. The Attorney General for the defendant officials urged fraud in the original bid and defects in the work.

As to the first: Even before the contract was executed one Warter, a taxpayer, commenced in Pierce county an action to enjoin the county commissioners from entering into it, alleging that the relator was getting it by fraudulently concealing a secret price from the patentees that gave him an advantage over other bidders. That action was dismissed without prejudice after a hearing.

Upon this dismissal the commissioners executed the contract, and the relator immediately went forward with it. Nevertheless, another taxpayer, one Reynolds of Pierce county, brought a month after Warter's dismissal an action in Thurston county on similar allegations against this relator, the Pierce county commissioners, the state highway commissioner, and the state auditor, to prevent payment by the state. The highway commissioner and the auditor appearing through the Attorney General, a preliminary injunction was granted, only to be soon rendered nugatory by this court in State ex rel. Pierce County v. Superior Court, 86 Wash. 685, 151 P. 108, a proceeding in prohibition by the present relator. In that case we held that it was for the Attorney General, and not for taxpayers, to enjoin misappropriations of state funds. In the argument here the Attorney General, appearing only as amicus curiae, asserted the right of the taxpayer to sue.

By the Warter suit alone the alleged fraud had been noised about before the contract was so much as let and work begun; nor, under the statutory relations between the state and county officials in this work, can it be pretended that the former were less apprised than the latter. Before this work was begun, therefore, a taxpayer had failed, and the state had not used its opportunity, to prevent it. We have repeatedly held that in its business relations with individuals the state must not expect more favorable treatment than is fair between men. State ex rel. Gillette v. Clausen, 44 Wash. 437, 441, 87 P. 498; Spokane Street Ry. Co. v. Spokane Falls, 6 Wash. 521, 33 P. 1072; State ex rel. Maddaugh v. Ritter, 74 Wash. 649, 650, 134 P. 492; Ettor v. Tacoma, 77 Wash. 267, 275, 137 P. 820. The state in its dealings with individuals should be held to 'resolute good faith.' State v. Milk (C. C.) 11 F. 389. United States v. Willamette Valley, etc., Co. (C. C.) 54 F. 807, 811. Here we have the state in business relations. Would an individual be allowed to keep on receiving goods under a written contract in which, before any were delivered, he knew that he had been swindled in the price, and yet make no complaint until all were in his warehouse? This in effect is what the state is doing here. It daily received labor and materials from this contractor, waited until the work was completed, and then put itself in a position where, knowing the contractor cannot take out and sell these things again, it can dispute his claim. This is not a case of estoppel claimed by mere inaction of public officers. It is a case of their acting. Daily did those officials not only permit the delivery of labor and material on the public property, but see to it that it was laid to suit them. The state on its present argument was holding this contractor at a merciless disadvantage. By the agreement he was compelled to finish this work in a comparatively short time. Should he pause to see whether the state would attack the contract? He would then lose time which, if the state chose not to object, would be set up against him.

As in Ettor v. Tacoma, supra, we are of opinion that the state is estopped. But shall the contractor be relegated to quantum meruit or enjoy the contract itself? We sustain him in the latter. As for the fraud, it is not necessary in this case to pass upon that, or upon the status of a bid on patented process unaffected by waiver or estoppel. This contract was not void. Without reviewing a mass of authorities, often inharmonious and often perplexing through a loose application of the word 'void' to acts not ultra vires, we are clear that this was only a voidable contract subject to ratification. There was no such impairment or exclusion of competition as to render this bargain absolutely void. To begin with, the board was competent to contract for this road. What it was buying was not something forbidden or outside of its powers. Now, no fraud being alleged against the board itself, we must assume that, when it invited bids for twelve kinds of pavement, one kind was as acceptable as another and any might have been chosen. Competitive bidding there was. Nobody claims that the board was using the other eleven kinds as a blind with secret arrangement to deal only on bitulithic. It was, then, honestly proceeding in the second step of competent authority. This is not a case of wholly leaving out an indispensable step or condition precedent, as in Green v. Okanogan County, 60 Wash. 309, 111 P. 226, 114 P. 457, where the commissioners let a bridge contract without bid whatever. Between fraud in the call and fraud in the bid we must distinguish. The secret fraud of the bidder had not impaired the statutory machinery of contract, and his fraud, if any, was one which could be waived. When my vendor cheats me in the contract price or quality, I may waive that when I discover it and decide that the bargain is still a good one, accept or retain the goods, and ratify the thing. On such grounds contracts are merely voidable.

To hold this contract absolutely void, we should have to say so on the call itself and pronounce the proceedings actually or substantially ultra vires. Is the including an invitation to one patented process to vitiate a call that includes fifty kinds not patented, because on the one competition is less free? In Great Northern v. Leavenworth, 81 Wash. 511, 521, 142 P. 1155, we did not find it necessary to decide this, for there the patentee filed consent to make the process available to any successful bidder, and on the bare proposition there is great discord of authority. But whether or not a call on one alone is bad without the patentee's proffer, we are clear that, when the call in good faith includes other kinds, there is not that utter absence of legality which is called void. As a test, nobody would quickly say that the contractor here after getting the award could have repudiated it as binding on no one, ultra vires, and something on which his sureties would not have to respond. It would be going excessively far to say that this contract could not even be ratified by the state if actually a profitable one.

We do not say that to be void a contract must be either a forbidden one in terms or one plainly beyond a public body's functions, for, even within its jurisdiction, it may leave out some step so plainly essential and precedent to an exercise of its powers that one may say that the very persons who dealt with it knew that what they were doing was wrong. The exact line we do not purpose to draw. That is best left to instance and degree. It is enough to pronounce this contract at most but voidable.

As to the second ground, it is palpable from the record that the faults in the performance now discussed are so small as to be almost within the rule of de minimis. The state highway commissioner, for his part, gives no testimony against that performance. His first assistant is called instead. That officer admits that his superior had said that he had no objection to the work, which he would accept were it not for the pendency of the Thurston county injunction. Now that was soon held to be without jurisdiction. Nor can this assistant point out any defects that strike us as amounting to just complaints. He concedes, too, that to the county engineer had been left the inspection, and that that engineer was satisfied. No good reason does he give why the few things he points out today were not immediately complained of that the relator might remedy them. Indeed, much that is now drawn into this controversy has to do with whether the original specifications were what they should have been, a question surely settled by the parties in their contract.

In the most gigantic contracts between private parties the courts have never hesitated to say that the certificate of an architect or engineer was earned and would be considered as delivered when in truth it ought to have been...