Anders v. Philadelphia

Opinion bx Mr. Justice Stewart, The plaintiffs, residents and taxpayers of the city of Philadelphia, sought by bill in equity to restrain further payments under a contract between the city of Philadelphia and Edwin H. Vare, one of the defendants, by which Vare for the consideration of $1,299,000, undertook to clean the streets of the city during the year 1910 in accordance with the specifications recited in the contract, on the ground that the contract had been let as the result of a collusive understanding that Vare was not to be required to do all the work specified in the contract; that he was to be permitted to disregard the specifications without incurring the stipulated penalties, and was to be allowed to receive the entire amount of his bid regardless of the amount of work by him performed; that the purpose of such collusive understanding was to prevent competitive bidding and that such had been its effect. It was charged that Vare had performed less than one-half the work required under the contract and specifications; that notwithstanding, he had been paid ratable monthly installments, excepting for the month of December, on the full amount of his bid; that the stipulated penalties had not been enforced against him, and generally, that the contract was null and void because let pursuant to a conspiracy entered into to cheat and defraud the city. In the separate answers filed by the city and by Vare, the material averments of the bill were specifically denied, and issue was accordingly joined therein. The record before us is voluminous, but we are spared the labor and examination of the evidence by the admission on part of the appellants that the‘findings of the learned chancellor who heard the case correctly exhibit it on its facts. The ease has been submitted on these findings, and the only contention made is that it results- from the findings, as an inevitable inference, that the contract with Vare was the product of an un — 137 — lawful combination entered into with a view to prevent competitive bidding, and that the chancellor erred in his conclusion therefrom that the proofs were not sufficient to warrant him in finding that there was no real combination or conspiracy to this end. We deem it unnecessary in this connection to do more than indicate in a brief way the special findings on which the appellants rely, since, however important the facts established might be in an action by the city against the defendant Vare, as we view the case, they are without controlling significance in connection with the one governing question which is squarely raised in the assignments of error. The special findings may be thus briefly summarized. There was failure on Vare’s part to comply strictly or fully with the requirements of the contract; the officers of the city had knowledge of such failure as the work progressed through reports made to them by the Inspector; there was like failure by Vare and like knowledge by the officers of the city with respect to similar contract for the year 1909; strict compliance with the specifications. in the contract of 1910 would have resulted in the loss of a very large sum of money to the contractor, amounting in all probability to more than a million dollars, and possibly to over two millions; seven thousand dollars was exacted of Vare in the way of fines for violation of specifications during 1910; when Vare submitted his bid he knew that to perform the work in accordance with the specifications at the price bid by him would necessarily result in serious loss to himself; when the contract was awarded, the main object the officers of the city had in view was the proper and sufficient cleaning of the streets during the year, and they did not expect the specifications of the contract to be strictly and in all details carried out by the contractor; the daily reports of the contractor of men and machines, employed by him were largely in excess of the actual number of men, and machines actually employed. The contention on — 138 — part of appellants is two-fold; first, that applying to these facts “the interpretation consistent with ordinary human action and common sense, there is an inevitable inference that there was an understanding between the officers of the city and the contractor, when the contract was awarded, that the contractor would not be required literally to obey the specifications and would not be fined for disobedience of them;” and second, “if there was such understanding, it would amount to an unlawful combination to defeat the statutes requiring competitive bidding.” The first proposition is too plain for discussion, and is conceded; but that the second results as a conclusion from the first is clearly a non sequitur, as the facts in the case abundantly show. Nothwithstanding the above facts relied upon by appellants, we have this distinct and unchallenged finding by the chancellor: “In competition for the contract four bids were presented to the City in response to the advertisement asking for such bids. The bidders were People Brothers, Mack Paving and Construction Company, David McMahon, and the defendant E. H. Vare. Yare, to whom the contract was awarded was the lowest bidder. We are not able to find anything in the proofs which would warrant us in reaching a conclusion that these bids, or any of them, were collusive as between the bidders and Yare.” If we refer to the testimony we find nothing to impeach the correctness of this finding, but on the contrary much to support it. Conceding, as we must in the absence of evidence to the contrary, that these unsuccessful bidders were responsible parties, the burden rested upon appellants to show that they all participated in the alleged fraudulent collusion, and submitted their bids, not in good faith, but upon a fraudulent understanding that in any event the contract was to be let to this defendant. The fact that Yare had an understanding with the city officials that compliance with the specifications would not be required by him, however much this would be a — 139 — departure from plain business principles, and expose tbe officials to suspicion and censure, would not show conspiracy to defeat competitive bidding in any such conclusive way as tbe law requires, except as it further appeared that in this respect Yare was advantaged over the others. If all alike bid on the same terms and with the same understanding, irregular and unbusinesslike as the transaction would be, it would lack the essential element of fraudulent conspiracy to defeat competition between bidders. Not only is there an absence of any finding that Vare bid with any understanding that the others did not have, but the close approximation in the bids would seem to indicate that each had been governed in making his bids by the same considerations which influenced the others. The defendant’s bid was $1,299,000, another was $1,350,000, another $1,403,000, while the fourth and highest exceeded the lowest by $200,000, which, as explained, included the cost of assembling a plant with which to do the work. Can it be possible that these bids were made in any different terms than those given to Vare? If they were — and here we exclude collusion because the finding of the court acquits these bidders of that — then it follows that each was willing to undertake, just as Vare, to do work for the city which each knew would cost upwards of a million dollars in excess of what they were to receive therefor. To our mind this, to say the least, is most unlikely. It would be far more reasonable to infer that all alike understood that strict compliance with the specifications was not to be required. We have dwelt on this feature of the case because of its controlling significance. The third assignment of error, which includes the second as well, fairly and squarely raises the question we have been considering. What is there assigned for error is the refusal of the chancellor to hold that “The contract in suit is void because it was the result of an unlawful combination between the contractor and officers of the City, to defeat the — 140 — statutes relative to competitive bidding.” In the proposition here expressed we have the whole of appellants contention concentrated. If, as there stated, the contract resulted from any such combination, it follows necessarily that the contract was corrupt and should have been declared void; but if this be not established, according to the measure of proof which the law requires in such cases, the contention must fail, for in that event the failure to perform the work required under the contract in the manner therein provided, becomes a matter between the municipality and the delinquent contractor, as to which the former alone can be heard to complain. For, as well said by the learned chancellor, “So far as the plaintiff’s case is based upon a claim that the contractor, Yare, failed to' comply with his contract to do the work called for by the specifications, and, therefore, that he is bound to account for and repay to the City the moneys which were received by him from the City for the work which he ought to have done under the contract, we deem it sufficient to say that in our judgment the plaintiffs have no standing to require the contractor to render any such account. If it were within the power of taxpayers in all cases Avherein it might be claimed that a contractor had failed to comply with the provisions of his contract, to come into court and cause the matter to be investigated, and, in case of default of performance, to require the contractor to render such an account as is called for in this case, the affairs of the City would be thrown into endless confusion, and the proper functions of the municipal officers would, to a large degree, be devolved upon and assumed by the courts. We regard the municipal authorities as the repository of all the power that is needed to deal with such questions, as a general rule. A gross violation of duty might be sufficient ground for impeachment or prosecution. However that may be, the supervision of work done under municipal contracts and the making of payments — 141 — for work done under them, in the absence of fraud of a character which would justify the interference of a court of equity, must be left to those who by law are entrusted with the responsibility over these matters.” If there was competitive bidding without collusion on part of the bidders — and this we have seen is an established fact in the case — it follows that the letting of the contract to Yare, no matter what may have been the intention of Yare and the City officials in this regard, could not have resulted from such intention; in others words, if the purpose of the parties to the contract was to avoid competitive bidding, and that purpose failed in execution, the fraud contemplated could not have entered into the contract subsequently made. While the findings on which appellees rely are most pertinent to the inquiry before us, and while they are convincing that the ordinary safe-guards against fraud were utterly disregarded in the letting of this contract, yet, remembering that the one ground of challenge is conspiracy to prevent competitive bidding, it cannot be said that they are sufficient in themselves to establish the guilt of the parties so accused. In this connection we can do no better than repeat here what was said by the learned chancellor in his opinion: “It must be borne in mind that the question before us is not to be settled by any views which we may have as to the sufficiency of the work done by the contractor to keep the streets clean, or as to the full fidelity and efficiency of the officers of the City in supervising the work of the contractor, or as to the manner in which the contractor performed his work, or even as to whether or not, if he had strictly complied with the terms of his contract, he would have made or lost large sums of money. The simple and single question now under consideration is whether or not the proofs in the case ought to lead us to the conclusion that there was an agreement or combination between the contractor and the supervising officers of the City whereby he should — 142 — be favored and allowed to draw money under the contract without doing the work which would justify the payment to him of the money received by him. The affirmative of this question was assumed by the plaintiffs when they filed their bill, and it was incumbent upon them to establish it by sufficient proofs before we can properly be asked to sustain their position.” It is to this feature of the case that we have confined the discussion. Our conclusion has already been indicated, and it only remains to state formally our concurrence in the-findings and conclusions of the learned chancellor. The appeal is dismissed at cost of appellants, and the decree is affirmed.