Validity of Fire Department Contracts

Validity of Fire Department Contracts

Important Rulings of Higher Courts Interpreting the Law in This Connection—How the Rights of the City are Protected

WHEN determining whether a contract is valid which involves a municipal Fire Department, or its officials, several established phases of the law must be considered. In fact the Courts have formulated certain rules that may be referred to for the purpose of determining with reasonable certainty when a municipal contract is valid and enforceable.

A municipal contract is valid (1) if the contract is formulated strictly according to constitutional provisions, state laws, city charter requirements and city ordinances; (2) where there was no lack of power in the municipal corporation’s officials to make the contract, but there was merely an irregular exercise of such power, the contract may be valid because a person contracting with a public body, under such conditions, is not obliged to scrutinize, at his peril, the corporate proceedings; (3) where the contract is within the power of the municipal officials, but was entered into with unauthorized agents of the other party and the contract has subsequently been ratified and confirmed by the municipality, or its properly authorized agents, a valid contract exists.

The rules which indicate invalidity of a contract are, as follows: (1) where the contract is within the municipal power, but entered into through the municipality’s unauthorized agents, and the acceptance or ratification of the contract was not by its duly authorized agents, but by unauthorized agents or officers; (2) where the contract is not within the power of the municipality’s officials there can be no ratification or acceptance legally, and consequently the contract is void; (3) where the contract is within the power of the municipality, but entered into with its unauthorized agent, and there is no ratification or acceptance by the properly authorized officials, an invalid contract results.

Frequently, an invalid contract which may he ratified by proper public officials and rendered valid, remains invalid through neglect or failure of officials to take necessary steps to ratify it. However, this unfortunate circumstance can exist only when the contract is within the power of the municipality, but it was made or signed by unauthorized officials.

For illustration, in Potter vs. Borough of Metuchen, 155 Atl. 369, decided during the past few weeks, it was shown that two members of the Borough Council, referred to as Fire Commissioners, made a verbal contract with a contractor agreeing to pay the latter $350 to construct a concrete floor in a fire house.

The city refused to pay the bill and the contractor filed suit. During the trial the contractor proved that the Fire Commissioners were clothed with authority and duty of making necessary repairs to and replacing equipment, etc.

Although it is within the power of the municipality to repair its buildings, the Fire Commissioners were not specifically authorized to replace floors in fire houses or other public buildings. Therefore, since the agreement had not been ratified or approved by the properly authorized officials, the Court held the contract void, saying:

“Et cetera means: ’And other things or the rest; and so forth: used to indicate others of a kind specified.’ We are entirely unable to bring ourselves to the conclusion that this abbreviation used in connection with the particular specification of fire equipment should be taken to include repairs to a floor of a leased fire house. . . . From the state of ease before us, we are . . . compelled to And that there is nothing before us upon which the finding of the trial Court as to authority of the Fire Commissioners to enter into the contract in question can be based.”

SUBJECTS TREATED IN THIS ARTICLE:

When a Municipal Contract is Valid.

Rules Must Follow Provisions of Ordinance. Verbal Agreement to Sell Real Property is Void.

The Rights of the City.

Scope of a Written Contract.

Unreasonable Sale Contract Held Void.

Must Follow Provisions of Ordinance

As previously stated, a contract of purchase is invalid if the rules, regulations, state statutes and other legal requirements are not fully fulfilled. Therefore, a contract for the purchase of fire equipment is not valid if any material irregularities are shown to have existed when the contract was made.

For instance, in Burt vs. Municipal Council of City of Taunton, 176 N. E. 511, it was disclosed that the Council of a city adopted an order forbidding committees to make purchases in an amount exceeding five hundred dollars

“without first calling for sealed bids by advertisement, published in the Taunton Dally Gazette, setting forth Hi. specifications and the time and place where and when such bids will be received. . . .”

Later the municipal committee decided to purchase a pumping engine. Sealed proposals were called for by advertisement in a local daily newspaper setting forth the specifications. However, the advertisement actually published did not set forth the specifications but said merely that sealed proposals would be received at a time and place specified for furnishing a motor driven pumping engine

“In accordance with specifications which may be had at the Chief Engineer’s office, Central Fire Station. . . . The right to reject any and all bids is reserved.”

Certain citizens filed suit to prevent purchase of the fire equipment by the committee, or the Fire Department, on the grounds that the advertisement was not published in accordance with the above mentioned order. In sustaining this contention and holding the contract to make the purchase void, the Court stated the following important law:

“Manifestly thin advertisement did not conform to the terms of the order. It did not wet forth the specifications, but simply referred to a place where such as existed might be found. Even those specifications were in outline showing only in a general way what was required, each bidder being required to provide complete specifications in detail. . . . Its purpose is to protect the financial interests of the city by preventing favoritism in awarding contracts and to put a limitation on the otherwise very broad powers of the city officers to bind the city by contract. Its tendency is to give full publicity to proposed city contracts, to establish genuine and open competition upon the same footing after proper advertisement, and to insure honest methods of letting contracts.”

Verbal Agreement to Sell Real Property is Void

The Courts have consistently held that a verbal contract is void by the terms of which it is agreed to lease, sell, give passage rights, or an easement pertaining to real property. Moreover, a written contract given by municipal officials and pertaining to city property always is void if the officials fail to strictly abide by slate and city laws which delegate authority to transact business of this nature.

For example, in City of Aransas Pass vs. Minter, 34 S. W. (2d) 1113, it was disclosed that a municipality owned a strip of land and the city officials decided to construct a fire station on it. The owner of property abutting this strip sued the city to prevent construction of the fire station on the contention that by a verbal agreement the city officials had given an easement over this strip for the purpose of ingress and egress to and from the adjoining properties, and a passageway for the public. It was further contended by the property owner that in reliance upon this agreement he constructed a business building upon his lot so that it opens upon the vacant strip, and receives its only light and ventilation therefrom, and that if the city constructs its fire station on this strip of land it will greatly impair the value and usefulness of his business building. Notwithstanding this argument the higher Court held the city entitled to construct the fire station, and said:

“There IS and was no written conveyance by the city of the alleged easement. It is elemental that an easement such as that claimed by appellee (property owner) constitutes such an estate in land as that contemplated in the Statute of Frauds, which prohibits the conveyance thereof except through a declaration in writing. . . . If a verbal agreement of this nature could ever operate as a conveyance of land, the alleged agreement in this case was as a matter of law and fact too vague and indefinite to constitute a binding obligation upon the city to forego its inherent right and affirmative obligation to the public to put the property involved to whatever use may best serve the public interest, which is a matter to be determined by the city governing board from time to time and administration to administration, unless and until it is permanently dedicated to a particular public use inconsistent with all other uses, and such dedication must be done under forms and solemnities essential to the validity of such acts, and at no time employed in this transaction.”

Rights of City

Various Courts have held that a city is a mere auxiliary to the state government. It is a public institution for selfgovernment and local administration of. the affairs of state. It is appointed and empowered for that purpose and is therefore an agent of the state for local administration of governmental affairs.

In its public character a municipal corporation is the agent of the state acting as an arm of the sovereignty of the state created for the convenient administration of the government exercising to the extent that they have been granted the governmental functions and powers of the state.

As previously stated, governmental functions are those conferred or imposed upon the municipality as a local agency of limited and prescribed jurisdiction to be employed in administering the affairs of the state and promoting the public welfare. The dual or double capacity in which a municipality acts results in it exercising two classes of rights, two classes of powers and two kinds of duties recognized in many jurisdictions in the United States. Considered as an agency of the state, the governmental functions, powers, and rights of the municipality are variously designated as public, legislative or political.

When not considered as an agency of the state but in the other of these dual capacities, the ministerial functions and powers exercised are variously designated, as private, quasiprivate, proprietary, municipal or even commercial.

Generally speaking, a municipal corporation is allowed legally to go into a business only on the theory that thereby the public welfare will be subserved. So far as gain is an object, it is a gain to a public body and must be used for public ends. In other words, the municipal functions are those granted for the specific benefit and advantage of the urban community embraced within the corporate boundaries.

It is readily apparent that the distinction between the two capacities of a municipal corporation is important, but it is not always easy to draw. In fact some functions are so close to the line that Courts vary in their views concerning them and are held in some states to be governmental and in others private, but it is generally conceded that a municipal corporation cannot be constitutionally authorized to undertake any functions really private. If there is any restriction implied and inherent in the spirit of American Constitutions, it is that the government and its subdivisions shall confine themselves to the business of government for which they are created.

One important and well established rule relating to municipal corporations is that authority for a municipality to perform an act cannot be implied or assumed. If a reasonable doubt exists as to municipal power it will be resolved against the city. On the other hand, when a proper function of government appertaining to the duties of a city is apparent, the Court may presume the city’s power, although any ambiguity or doubt as to the extent of a power attempted to be exercised by a city, out of its usual range, should be resolved against the city.

(Continued on page 835)

Validity of Fire Department Contracts

(Continued from page 818)

Ministerial functions are those exercised by a city in the capacity of an individual or private corporation. These functions are for services for which the citizens pay, such as arise from supplying water and the operation of other departments, the expense of maintenance being principally derived from payment for the services rendered instead of from taxation.

It is true that the doctrine is now recognized that as the necessities of the local population require, and because of the public interest in certain public utilities and the universal and intimate relation they have to lives and pursuit of happiness of the local citizen, cities are empowered to acquire and operate in the interest of the local population certain business and properties such as water, lighting, and heating plants, sewerage and garbage facilities, telephones, and transportation. These are all operated in the so-called ministerial rights of the city but theoretically in the interest and to the convenience and profit of the local citizenry who in reality constitute the real owners of the properties.

On the other hand, it was never intended under the most extreme views of commercialism that this doctrine may be used and operated to the disadvantage of the people and at excessive cost and expense to the end that the profits therefrom may be expended in governmental activities lawfully exercised within the limitation of constitutional and legislative authority.

For illustration, in the late case of Loeb vs. City of Jacksonville, 134 So. 205, a municipality enacted an ordinance levying an ad valorem tax upon the property in the city to create a fund to be expended for the purpose of advertising the benefits, including the modern Fire Department equipment, possessed by the city. In holding this act illegal and not a valid taxation, the Court said:

“The function of government is the enactment and enforcement of rules of conduct for the people within a given territory to secure so nearly as possible individual opportunities for the enjoyment of the so-called inalienable rights which include the pursuit of happiness by the people within the territory. Not to reach out and bring into the territory other peoples from foreign states and territories that they may also be informed of the opportunities afforded by the particular government and may migrate to the territory to enjoy them. Whatever the modern city may be as distinguished from the cities of three or four decades ago when our Constitution was adopted, it cannot be said that they have grown from under its influence and become a sort of Commercial Frankenstein prodigy.”

It is, therefore, quite apparent that any contract is void by which a municipality agrees to expend money for publicity purposes, unless state laws distinctly delegate such authority.

Scope of Written Contract

Ambiguity in a written contract may arise where the words in the agreement are uncertain when applied to the subject matter of the contract, as well as from words which are uncertain in their literal sense. Moreover, the law is well established that during a trial involving a written contract no evidence may be introduced to vary or explain the written words, except in limited cases.

In other words, when the terms of an agreement have been reduced to writing, this contract legally contains all the terms and obligations, and ordinarily no evidence of the agreement can be introduced other than the contents of the writing itself. Various Courts have held that the only instances when any testimony may be introduced to prove verbal agreements, when a written contract is being litigated, are as follows:

(1) Where a mistake in the writing is claimed by the complaining party;

(2) Where the validity of the contract is disputed; or

(3) When the verbal testimony is Intended to explain the legal meaning of an ambiguous contract.

For instance, in Barnhart vs. Preston, 290 Pac. 545, it was shown that a seller entered into a written agreement for a specially constructed machine. Several demonstration runs were made after the machine was finished, but never did the machine perform as required by the written contract.

The seller contended that failure of the machine to perform was due to the fact that the accessories furnished by the user were inadequate and inefficient. Therefore, the question presented the Court was whether the agreement included the obligation of the purchaser to furnish the accessories. In this case the Court permitted the seller to prove his contentions by introducing testimony relative to a verbal agreement because such testimony tended to explain the ambiguous clause.

Unreasonable Sale Contract Held Void

The legal rights of buyer and seller, with respect to contracts of sale, are well established. Generally speaking, where the contract of sale does not specify the seller’s remedy, the municipality refuses to take the merchandise and pay the agreed price therefor, the seller may resort to either one three remedies, viz: (1) Standing on the sale, the seller may retain the property for the municipality and sue for the purchase price; (2) Acting as the agent of the municipality, the seller may resell the property, and then sue to recover the difference between the contract price and the price obtained on the resale; or (3) The seller may treat and keep the property as his own, and recover from the municipality the difference between the contract price and the market price at the time and place of delivery. However, in a case where the title to the property has not passed to the municipality, the seller has no cause of action for the contract price. In such case, he is compelled to recoup his loss, if any, by an action for damages founded upon a breach of the municipality’s contract to accept and pay for the property.

It is a fundamental rule that the determination of the meaning of a contract depends, in each case, upon the intent the parties as evidenced by the entire agreement construed the light of the circumstances under which it was made. Therefore, as a general rule, the intent of the parties to a contract of sale will be interpreted by the Court and a decision rendered accordingly. On the other hand, if the stipulations of the contract are unreasonable or oppressive with respect to either the buyer or the seller, the contract is void notwithstanding the fact that both parties agreed to such unreasonable provisions when the contract was made.

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