City of Chicago v. McKechney

Mr. Justice Freeman delivered the opinion of the court. It is the principal'contention of counsel for the appellant that the supplemental contracts of May 17, 1897, and October 8, 1898, are invalid because they were made without any new advertisement for bids and reletting the work to the lowest bidder in accordance with the provisions of Section 30, Art. IX of Chap. 24, E. S., being the act to provide for incorporation of cities and villages. As to the validity of the original contract of October 19, 1895, under which the work began, no question arises in this case. The decision, moreover, in City of Chicago v. Duffy, 179 Ill. 447, sustaining a judgment upon a similar contract for the construction of section 2 of the same water tunnel, would seem to justify the conclusion that it is a binding obligation. Some of its provisions have been construed, as before stated, in City of Chicago v. Weir, 165 Ill. 582. The section of the statute referred to, which it is insisted was not complied with before making the supplemental agreement of May 17, 1897, and the contract of October 8, 1898, is as follows: “ All contracts for the making of any public improvement to be paid for in whole or in part by a special assessment, and any work or other public improvements, when the expense thereof shall exceed $500, shall be let to the lowest responsible bidder in the manner to be prescribed by ordinance, such contracts to be approved by the mayor or president of the board of trustees: Provided, however, any such contract may be entered into by the proper officer without advertising for bids, and without such approval, by a vote of two-thirds of all the aldermen or trustees elected.” The last of the two agreements in question, that of October 8, 1898, Avas made pursuant to a report of the finance committee, and a resolution adopted by a unanimous yea and naAr vote of the city council. This resolution and report apparently received more than the necessary two-thirds vote of all the aldermen elected, and so far as that contract of October 8th is in accordance therewith, it complies with the requirements of the statute in question. The contract recites that it is executed because “ the parties are desirous of evidencing ” the arrangement embodied in the report and resolution adopted by the council July 11th;” and states that the said parties “ entered into a contract Avith the city of Chicago, dated October 19, 1895, and a contract supplemental, thereto, dated May 17, 1897.” This last recital is embodied also in the report of the finance committee of the council, but the supplemental contract of May 17th gains only such additional support therefrom as arises from its formal recognition in said agreement and report by the city officials and by the council. The city council and the mayor do thereby undoubtedly concede the existence of the supplemental contract of May 17th as a subsisting agreement, but not necessarily that it is valid. The arrangement evidenced by the said agreement of October 8th is by its terms confessedly a temporary expedient, a modus mvendi, to allow the work to go on, and authorizing the proper officers of the city to make estimates and payments in accordance with the terms of the supplemental contract of May 17, 1897, pending the settlement in the courts of the controversy over its validity and without prejudice to the rights of the city in such controversy. There are, however, in the report adopted by the city council,certain additional recommendations not embodied in the agreement of October 8th; first, authorizing payment by the city of $30,000 for April; second, payment of fifty per cent of amount withheld by the city under a fifteen per cent reservation in the original contract; third, that the city pay the expense of pumping accumulated water from the tunnel. It is urged by the city’s attorneys that the council had no power to so provide, and no power to authorize payment as provided in the resolution of July 11th; that all such proceedings were void. The proviso in section 50 of Art. IX above referred to, is, however, that any contract for work or other public improvement may be entered into without advertising for bids and without the approval of the mayor “ by a vote of two-thirds of all the aldermen ” elected. It is not required that this vote shall be in the form-of an ordinance. As a proposition creating liability against the city it required a yea and nay vote, which was had. In C. & N. P. R. R. Co. v. City of Chicago, 174 Ill. 439, 445, it is said that “ where the charter of a municipality is silent as to the mode in which the city council shall perform an act, the decision of the council may be evidenced by either a resolution or an ordinance.” The provision of the charter under consideration merely prescribes “ a vote of two-thirds of all the aldermen,” and this requirement was complied with. We regard the objection to the admission in evidence of the council proceedings of July 11th, and the contract of October 8, 1898, as not well taken. The payments authorized by the adoption of the report and resolutions -were legally ordered. The principal controversy before us is with reference to the validity of the supplemental contract of May 17, 1897. That contract provides an extra allowance for the contractors from and after March 15, 1897, as follows: First, “all material encountered in earth tunnel that is rock or of such a nature that it is classified as rock, shall be paid for at the rate of six dollars per cubic yard in addition to the lineal foot price;” second, payment of ten dollars per cubic yard for extra masonry in the excavation outside of the regular brickwork, where the tunnel is in earth or partly in earth and partly in rock. The first of these allowances is sought to be justified in said agreement itself by a reference to a provision in the original contract of October 19,1895, wherein it is provided: “ When the tunnel is partly in earth and partly in rock, the contractor will be paid an additional price per cubic yard for rock excavation over and above the unit price per lineal foot of tunnel in earth.” What the additional price would be was left to be decided in case the'conditions should arise. There is evidence tending to show it was conceded at the time by the city officials that the material called by the appellees “ conglomerate,” and by appellant “ boulder clay” or “ hard-pan,” was of a character not provided for in the original contract. It appears from the evidence quite probable, as insisted by appellees’ counsel, had the city officials not changed the direction of the tunnel—it is claimed without the knowledge of the contractors—this “ conglomerate ” would not have been encountered. It was stated for information of bidders in the original specifications, “The following is an approximate length of tunnels * * * to be built under this contract, and the bids will be compared on this basis: * * * Section 3, two thousand feet of 8 ft. tunnel in earth; 18,000 feet of 8 ft. tunnel in rock.” But after the city had changed the direction it appears that for a distance of more than 5,500 feet the tunnel ran through a substance which for purposes of tunnel excavation and construction, is like neither rock nor earth. The ’ reason for the alleged secret change of directions is said to have been to prevent property owners from knowing whether the tunnel passed under or through their property, thus preventing suits for injunction and damages. At all events the city officials, acting under and approving the supplemental contract of May 17th, in effect conceded that the material in question had not been anticipated or provided for. By the supplemental contract this so-called conglomerate is classified as “ material encountered in earth tunnel that is rock, or of such a nature that it is classified as rock,” and hence the excavation in it is treated as “ tunnel partly in earth and partly in rock,” bringing it under the clause in the original contract above referred to. This is the classification of the parties themselves, acquiesced in by both the city and the contractors. It was, we think, under the evidence a proper and legitimate classification, entitling the contractors to an additional price per cubic yard under the contract unless, as now contended by the city, its officers had no power to fix or agree to pay such additional price by the original contract agreed to be paid for excavation in material, part earth and part rock, without first re-advertising for bids therefor and reletting to a new lowest bidder. The second of the allowances under the supplemental contract, that of $10 per cubic yard for extra or back masonry, is an entirely new provision, not based upon anything in the original contract. On the contrary, that contract provided that no such allowance should be made. The allowance rests, therefore, entirely on the validity of the supplemental contract. Its necessity arose, it is said, out of the nature of the so-called conglomerate, which there is evidence tending to show was such that the necessary blasting made a larger excavation than in solid rock, or than was necessary in mere earth tunnel, thus requiring more back masonry than contemplated by' the original contract, and increasing the expense therefor. Counsel for the city now contend that the contract of October 19th having been let to appellees as the lowest bidders in accordance with the statute, could not be changed in any respect by the municipal authorities without a new advertisement and reletting; that nothing can be added, that any change is void, and that there can be no recovery either under the supplemental contract or upon a quantum meruit. It is said if there is any exception to this rule it is confined to such work as is strictly incidental to the work let and necessary to make a complete structure. The original contract provides that should the commissioner of public works deem it necessary to make any alterations which will increase the expense, such alterations shall not annul the agreement, “ but the commissioner shall determine the value of the work so added,” such value to be added to the contract price. It appears to be conceded that the line of the tunnel was in fact diverted from the original line where borings had been made to determine the character of the material through which the tunnel was to run. There was evidence tending to show that material changes were also made in the depth of the center line of the tunnel. It was on this ground, changes in the direction and depth of the tunnel, that the trial court sustained the supplemental agreement of Hay 17 th asa valid exercise of the authority given by the old contract to the commissioner of public works to be used in case alterations were made increasing the expense, viz, authority to determine the value of the work so added. It is clear, Ave think, that the commissioner of public works did so determine and did make an agreement embodied in the supplemental contract of Hay 17th, and that the city officials acted upon and ratified it so far as by their acts they could do so, although it Avas not signed by them. If that provision in the original contract authorizing the commissioner to determine the ATalue of the work added by the alterations was valid, then the commissioner had poAver, we think, to make the supplemental agreement. It was held in County of Cook v. Harms, 108 Ill. 151-158, and re-affirmed in the City of Chicago v. Sexton, 115 Ill. 230-212, in reference to a similar provision, that it did not include within its meaning “ any material departure from the plans and specifications, resulting in a neAv and substantially differing undertaking; ” and it is said that the alterations intended must have been such “as Avere incidental to the complete execution of the work as described in the plans and specifications, and therefore of only minor and trifling importance, for otherwise some definite mode of determining Avhat prices should be paid for them Avould also ha\Te been prescribed by the writing.” In City of Elgin v. Joslyn, 136 Ill. 525-531, it is said: “ Where the extra work and materials are of a different character from those specified in the contract, the rates named in the contract will not apply, and the party performing will be entitled to recover according to the value fixed by the evidence.” In the present case the value was fixed and agreed upon between the contractors on the one hand and the representatives of the city on the other. If the agreement between the contractors and the commissioner of public works was made in good faith, and there is no question here but that it was, so far as the city is concerned, and gave a reasonable compensation, fair alike to both parties, for the extra material and labor made necessary by the alteration, it ought to estop the parties from now questioning its amount. But the alterations in question did not, we think,involve any material departure from the original plans and specifications, such as to constitute, in the words of Mr. Justice Scholfield, “ a new and substantially different undertaking.” (City of Chicago v. Sexton, supra.') A change of direction in the tunnel and a change in depth might not under ordinary conditions make a material change in the cost of the work. It was because the formation of the underlying strata proved to be such that, as there is evidence tending to show, a new material, not considered by either party Avhen the bids were made and the contract awarded, was unexpectedly encountered. This was more expensive material in which to construct the tunnel. The alterations which brought the tunnel into this material did therefore increase the expense, but this did not annul the original agreement and it became the duty of the commissioner to “ determine the value of the work so added.” To have re-advertised and let a new contract, the work having been partly finished, and new conditions arising for which the contractors were not responsible, would have been impracticable. It would have involved a practical abandonment of the contract, exposed the 'city to payment of damages, created confusion, litigation, and delay. The emergency Avhich had arisen was incidental to the prosecution of the work. The neiv material encountered called “ conglomerate,” might not continue for a long distance. It might be avoided by other changes in the gradé or direction of the tunnel, which the commissioner of public works had poAver to make. The arrangement was not a new contract for neAv Avork within the meaning of the statute to cost more than $500. It was an agreement to pay a certain extra sum per cubic yard for excavation and extra masonry so long as the tunnel should continue in that particular material, Avhich was apparently uncertain. If the price proved too high or the expenditure proved excessive, the city should have interposed, if it belie\Ted the arrangement improper. But instead of so doing, the city council expressly authorized the payments to be continued, indicating, at least, that it did not regard the price as excessive. This authorization was approved by the mayor and concurred in by Controller Waller and Commissioner Mc-Gann who signed the contract of October 8th, evidencing the arrangement. Hence, the views expressed in Sanitary District v. Blake Manf. Co., 179 Ill. 167, are applicable. It is true the extra payment to which the contractors, became entitled under the allowance made by the city’s representative, amounted in the aggregate to a large amount. But it is not shown to be more than the work was reasonably worth, nor is there any suggestion of fraud or dishonesty in making the agreement. There is no intimation that it was made with any other than honest motives. It is charged by the city that in carrying on the work, the contractors made the excavations larger than was necessarjr in order to get extra pay for extra masonry. This was a matter for consideration of the jury, and the evidence upon this point was before them when they rendered their verdict. But the good faith in making the agreement is not questioned. While, therefore, the supplemental agreement of May 17, 1897, was not let to a new bidder nor formally ratified by the proceedings of the city council of July 11, 1898, it was nevertheless recognized as a contract, and did not, we think, require such letting or formal ratification. It was a contract which the city could lawfully make in view of the original agreement under the facts, and under the statute by a two-thirds vote, xvithout advertising for bids. In Connett v. City of Chicago, 114 Ill. 233-239, it is said that no doctrine of the law is better settled than where the contract entered into on behalf of a principal is one which the principal himself might lawfully make, it may be ratified, and such ratification may be inferred from acquiescence after notice. It is true that the contract in question was not formally executed by the city officials. But they acted upon and made payments according to the agreement of May 17th for a long period of time. These payments were recognized by the city council and continued by its direction, the council reserving only for submission to the courts the question of the legality and binding force of the agreement, but not questioning the propriety or reasonableness of the arrangement. Although a thing be done in an improper way, which the city had power to do in a proper way, when it is done and accepted and enjoyed by the municipality, the latter must pay for what it would have had to pay for, had it got it in the right way. See Village of Harvey v. Wilson, 78 Ill. App. 544-551, and cases there cited. Cases are cited by counsel for appellant in support of the proposition that where a contract is let to the lowest bidder the city or its officials can not alter it, or add to the obligations of the municipality thereunder, without a new advertisement and reletting. They are generally cases arising upon statutory provisions differing from the statute of this State referred to, and involving facts different from the case at bar. We need not review them, but content ourselves by stating that we do not consider them in point in the present case. What is said, however, in one of them, Allen v. Eogers, 20 Ho. App. 290, though not precisely in point, is in general accord with views here expressed. In the previous discussion we have considered incidentally many of the objections formally urged by counsel, and need not further review them in detail. Whether or not the appellees were entitled to recover damages alleged to have been caused by alterations in depth and direction of the tunnel, aside from the extra compensation allowed by the supplemental contract, was a matter of determination by the jury under the evidence, and was properly so submitted. There was evidentíy considerable latitude in the admission of evidence, and some of the technical objections thereto should, in our judgment, have been sustained. But we are unable to discover that improper evidence calculated to do any real injury to appellant was admitted. There was an effort to bring out all the complicated facts, covering many details and controversies, and upon the whole the trial was, we think, not unfairly conducted. The labor of this court would have been materially lightened, had the printed arguments, numbering some nine hundred and fifty pages, been more condensed. We have, however, given the case our careful consideration, but for obvious reasons can not undertake to notice at length all the points to which our attention has been invited. The judgment of the Circuit Court must be affirmed. Mr. Justice Horton : I can not concur in the foregoing opinion. Ho recovery against a municipal corporation upon a contract for any public improvement, where the expense thereof exceeds $500, can be sustained, unless the same was let to the lowest responsible bidder as provided by statute. Prior to May 17, 1897, appellees had been excavating a water tunnel under a contract with appellant. Differences had arisen between the parties and work was practically suspended. Ho reason is apparent why the work of completing said tunnel might not have been let to the lowest bidder as the law required. On the contrary, it seems to me, from the evidence, that there was no valid reason why this might not have been done. But, instead of so doing, the contract of May 17th was entered into between said city and appellees without competition, for the completion of said work. The amount to be paid under said second contract, as I understood the facts, is hundreds of thousands of dollars more than under the original contract. It appears to me expediency does not justify what is, to my mind, a judicial annulling of an exceedingly valuable statute passed for the protection of the people. Here the commissioner of public works changed the specifications in such manner ,as to make the work much more expensive, and then, without letting to the lowest responsible bidder, a contract for the work to be performed under the changed conditions was made with the original contractors by which the cost to the city was greatly increased. It may be that the price agreed upon was not excessive. As to this I express no opinion.