Konig v. Mayor of Baltimore

Thomas, J., delivered the opinion of the Court. This appeal is from a decree of Circuit Court No. 2 of Baltimore City dismissing the bill of complaint filed by the appellant, on his own behalf and on behalf of other taxpayers of Baltimore City, against the Mayor and City Council of Baltimore, the American Water Softener Company and others to have a contract between said company and the city annulled and the defendants enjoined from doing anything in furtherance or execution of the same. The Mayor and City Council of Baltimore, acting under authority conferred upon it by an Act of the Legislature, was engaged in erecting a filtration plant for the city, and having adopted plans and specifications for a “Filter Equipment,” the Board of Awards advertised for bids for the work as follows: “Sealed proposals, endorsed ‘Bids for Filter Equipment, Lake Montebello, Water Department, Contract No. 22,’ addressed to the Board of Awards of Baltimore City, will be received at the office- of the City Register, City Hall, Baltimore, Md., until 11 A. M. Wednesday, February 18th, 1914, for the equipment of the Filtration Plant, as shown on plans on file in the office of the Water Engineer, City Hall, Baltimore, Md. “Plans and specifications can be obtained at the office of the Water Engineer, City Hall, Baltimore, Md., on and after February 2nd, 1914. A charge of Twenty Dollars ($20.00) will be made for each set of plans and specifications; this amount will be refunded upon the return of these plans and specifications before Feb ⁶⁰⁸ ruary 25th, 1914, in good condition.

Specifications used in making a bid will be considered as returned. “A certified check of the bidder on a clearing-house bank, made payable to the Mayor and City Council of Baltimore for the sum of Ten Thousand Dollars ($10,000) will be required with each bid. “The successful bidder will be required to give bond to comply with the City Charter respecting contracts. “The Board of Awards reserves the right to reject any or all bids.” The specifications provided that the bids should be made upon the blank forms thereto- attached, and that the bidder should give the price of each item of the proposed work in writing and in figures. The sixth paragraph required the successful bidder to give .bond in the amount of the contract for his faithful compliance with the contract and specifications, and to indemnify and save harmless the Mayor and City Council of Baltimore from all costs, damages, etc., and “to save and keep harmless the said Mayor and City Council of Baltimore against and from all claims and losses to it from any cause whatever, including patent infringements.” Paragraph nine required the bidder to submit with his proposal a statement regarding his experience and business standing, and stated that it was the purpose of the Board of Awards not to award the contract to- any bidder who did not furnish reasonable and satisfactory evidence of his ability and- experience, etc. Paragraphs ten and eleven were as follows: “Bids for Alternative Items—(10) Bidders must submit bids on both of the alternative Items, 1-A and 1-B. The Board of Awards reserves the right to accept either one of the alternative Items in connection with the other items of this contract. “Statement of Quantities—(11) The following is a statement of the work required under this contract, and the items given below will be used as a basis in comparing the several bids, viz: ⁶⁰⁹ Item 1-A—For Strainer System (Alternative item.) Item 1-B—For Strainer System (Alternative Item). Item 2—For 32 Filter Rate Controllers. Item 3—For laying 300 tons of Bell and Spigot Pipe.

Item 4—For laying 145 tons of Bell and Spigot Specials and Valves. Item 5—-For laying 360 tons of Flange Specials and Valves. Item 6—For 7,500 pounds of Steel and Iron Pipe Hangers and Supports. Item 7—For 10 cubic yards of Concrete or Brick Pipe Supports.

Item 8—For Small Piping and Valves. Item 9—For Wash Water Recording Gages. Item 10—For Wash Water Level Gage. Item 11—For Chemical Recording and Sight Gages.

Item 12—For High and Low Water Alarm. Item 13—For Chemical Feed Controllers. Item 14—For Chemical Stirring Devices. Item 15—For Hypochlorite Device.

Item 16—For 3,424 cubic yards of Filter Sand. Item 17—For 1,931 cubic yards Filter Gravel.” Paragraph 66 contained, the following- provisions: “The City will pay, and the Contractor will accept, the prices stipulated in the proposal hereto attached, as full compensation for furnishing all materials, and for doing all the work contemplated and specified in this contract, * * * . Said prices shall also cover all royalties for patents, and patented material, appliances and processes used in the work described in the specifications and agreements.” Paragraph 77 provided that the contractor should be responsible for any claims made against the city or any of its agents for any infringement of patents by the use of patented methods, etc., and Paragraphs 78-79 and 80 were as follows: ⁶¹⁰ “Filter Equipment. “Alternative Items—Extent—(78) Either one of the two types of strainer systems designated hereafter, may he accepted for use in the construction of the plant at the option of the Board of Awards. A complete strainer system for 32 different filter units shall be furnished and placed under this contract.

Each filter unit is divided into two halves each measuring 13 ft. 6 in. by 53 ft. 6 in. inside. It is the intention to pass wash water through each of the above types of strainer systems at the rate of about 15 gallons per minute per square foot of sand area. “Item 1-A—(79) Item 1-A is shown upon drawing 67-A-3. With this type, water channels are formed by the spaces separating flat concrete ridge blocks, and the strainer system is formed by covering the spaces with continuous semi-elliptical perforated brass plates. The strainer plates are supported, in crossing the main water channel, on cast-iron plates.

With this strainer system it is possible to use Negative Head’ in filtration. That is to say, the operating head would be the head in the filter tank,-plus such suction as might be created by lowering the water level in the filtered water reservoirs. “Item 1-B—(80) Item 1-B is shown upon drawings 67-A-3 and 161-A-4. This type is the same as Item 1-A except that in each filter strainer system, two of the cast-iron bridge plates have been modified in form and vented in such a way that only the head due to the depth of water above the strainer plates is used in filtration, as specified in Paragraph No. 84.” It was alleged in the bill and admitted by the Water Engineer of the City that the construction provided for under Ttefn 1-A referred to in paragraphs 11 and 79 involved the use of the process called “Negative Head,” and the Engineer further stated that Item 1-B was designed by him with the view of avoiding the “Negative Head” process, that the cost of the two systems, aside from the cost “of any patent license, ⁶¹¹ would be practically the same,” except that Item 1-B would involve the additional cost of putting on some pipes. It was also alleged in the bill and evidence was offered tending to show that the process called “Negative Head” was a patented process, the patent for which belonged to the New York Continental Jewell Filtration Company, and that the Nor-wood Engineering Company and the Pittsburg Filter Manufacturing Company were licensed to use that process.

The City received the following bids for the work referred to: Item 1-A. Item 1-B. M. L. Bayard.............$323,071.75 $150,071.75 American Water Softener Co.................... 156,832.85 156,832.85 Norwood Engineering Co... 222,854.38 223,752.38 Pittsburg Eilter Mfg. Co.... 238,591.00 239,591.00 "With its bid the American Water Softener Company submitted the following communication: “American Water Softener Company. Philadelphia, Pa., February 25th, 1914. To the Honorable Board of Awards, Baltimore, Md. Gentlemen:— This communication is submitted with our bid for contract No. 22 and made a part thereof as fully as though incorporated therein in detail.

Our bid is submitted under the condition that, should the contract be awarded to us, and should the United States Letters Patent No. 644,137 be sustained in the appeal taken by the City of Harrisburg in the case of the New York Continental Jewell Filtration Company vs. the City of Harrisburg, Pa., and should an injunction to restrain the City of Baltimore and ourselves from constructing and equipping the Baltimore filters as per the plans and specifications prepared by the City be applied for and granted, then the filters shall be equipped and operated with the 'device for venting filter effluents,’ as shown on the City’s ⁶¹² drawing No. 161-A-4, and at the price named in our bid for Item No. 1-B, until the expiration of said Letters Patent and at which time we shall remove the vent pipes, free of charge, if the City should desire us to do so. Respectfully, American Water Softener Company, By Geo. F. Hodkinson (Signed), Manager Filter Department.” The bids were opened by the Board of Awards and referred to the Water Engineer, and at a meeting of the Board on the Oth of March, 1914, the Water Engineer submitted and read the following recommendation: “City of Baltimore, Municipal Department, March 6, 1914. Water Department, Ezra B. Whitman, Water Engineer, C. L. Rector, Secretary.

To the Honorable Board of Awards: Gentlemen—I beg to herewith submit full report and tabulation of bids upon the contract for the filtration equipment referred to the Water Board at the meeting of February 25th. You will see from the tabulation that the lowest bidder on Alternative 1-B is M. L. Bayard, his bid totalling $150,071.75. The next lowest bidder is the American Water Softener Company, their bid totalling $156,832.85. The other two bids on 1-B total as follows: Norwood Engineering Company, $223,752.38; Pittsburg Filter Manufacturing Co., $239,591.00.

The American Water Softener Company are well-known builders of filtration plants. According to my information, they have built about seventy-five plants throughout the country, many of which included equipment similar to our own and operated in a similar manner. Some of these plants they have designed themselves as well as built. They are perfectly familiar with all the threats that ⁶¹³ are now being made by certain parties claiming to have patents and that such patents are being infringed; they have been through all this experience a number of times heretofore.

In addition to this, they have offered to build the plant according to either Alternative 1-A or 1-B at the same figure, with a proviso that if it should be established by a court of last resort that Alternative 1-A infringes any patent and an injunction to prevent infringement should be granted, then they should be at liberty to change their construction to Aternative 1-B without additional cost to the City; whereas the bid of Bayard upon Alternative 1-A is so high as to be prohibitive. In addition to this, M. L. Bayard & Company upon their letterhead which I have are described as ‘Manufacturers Steam Engine Governors, Ilindlev Steering Gears, Water Works and Filtration Plant Equipment, Light Machinery, Special Tools and Appliances/ thus indicating that their experience has been rather as' manufacturers of machinery, including filtration machinery, than as actual contractors for the construction of filtration plants. We have been referred by Mr. Bayard to three filtration plants built in Philadelphia upon which he worked as sub-contractor. We have been referred to no case where he was the original contractor in a filtration contract similar to the present.

Mr. Bayard is very highly spoken of by the people to whom we have written in connection with his work as sub-contractor; but in view of the facts that the American Water Softener Company has had very much wider experience, and are very widely and favorably known as designers and contractors for the construction of filter plants, and are regularly engaged in the water purification business and that alone, and of their making the same bid Alternative 1-A and 1-B, it is my judgment that they should be considered the lowest responsible bidder under these specifications, and the contract should be awarded them, the Board of Awards reserving the right to require the con ⁶¹⁴ struction o£ tbe contract under tbe direction o£ tbe Water Engineer in accordance with either Item 1-A or 1-B as may be directed. Bespectfully submitted, Ezra B. Whitman, Water Engineer.” The Board of Awards, after hearing counsel for the other bidders, awarded the contract to the American Water Softener Company, “reserving the right of requiring the construction of the contract under the direction of the Water Engineer in accordance with either Item 1-A or Item 1-B as may be directed.” On the 20th of March, 1914, that company entered into a contract with the City to do the work in accordance with the specifications, subject to the following provision: “It is hereby expressly understood and agreed that the right is hereby reserved to the Board of Awards of said Mayor and City Council of Baltimore, to require the performance of the work under this contract, under the direction of the Water Engineer, in accordance with either alternative Item 1-A or 1-B as may be directed by said Board of Awards, but in the event that the City or the Contractor is enjoined from constructing the work in accordance with Item 1-A, then the Contractor shall have the right to change the construction to that specified for Item 1-B.” The company also executed a bond as required by the specifications, and on the 8th of April, 1914, before the work under the contract was begun, the plaintiff filed the bill of complaint in this case against the City, the members of the Board of Awards, the Water Engineer and the American Water’ Softener Company as we have already stated. The Court .below passed an order requiring the defendants to show cause why the writ should not be issued as prayed. A decree pro confesso was obtained against the contractor.

The other defendants answered, evidence was produced by the ⁶¹⁵ parties, and on the 25th of March, 1915, the Court below passed the decree from which this appeal was taken. In addition to the evidence to which we have already referred, George A. Johnson, a witness for the plaintiff, testified that he was a hydraulic engineer and sanitary expert of New York City, and that at the instance of the owners of the patents for the “Negative Head” process he came to Baltimore to see Mr. Whitman, the Water Engineer, in December, 1913, and that he pointed out to him that under Item 1-A the plans and specifications for the filter system involved the use of the patented process called “Negative Head.5' He further testified that the form of construction covered by Item 1-B of the specifications did not involve the use of the “Negative Head” process, and that it was generally accepted in the engineering profession that the patents for that process were valid and enforceable patents. Mr. Whitman testified that at the time of his conversation with Mr. Johnson he did not believe the patents referred to were valid, and that he told Mr. Johnson “that even if the patents were valid that by changing the construction of the filtration plant to some extent the patents * * * would not be infringed.7’' He further stated that he did not agree with Mr. Johnson that the engineering profession accepted these patents as valid, and that the members of the profession with whom he had been thrown in contact did not so regard them, and had designed filtration plants without regard to the patents. The appellant contends that the contract was void (1) because “it was based upon a bid which contained a material qualification in direct violation of the specifications,” and the contract “was materially different from the contract contemplated by the advertisement for bids,” and (2) because the contract was executed in “contravention of the statute’7, providing for alternative bids.

The questions involved in this controversy are, we think, disposed of by the cases of Packard v. Hayes, 94 Md. 233 , and Baltimore City v. Flack, 104 Md. 107 , and the cases ⁶¹⁶ therein cited and relied upon, when read in connection with the present sections of the Charter of Baltimore Cit\v regulating the awarding and execution of contracts with the City. The Charter of the city, as enacted by the Act of 1898, Chapter 123, provided in section 14: “Hereafter in contracting for any public work or the purchase of any supplies or materials involving an expenditure of five hundred dollars or more for the City, or by any of the City departments, sub-departments or municipal officers not embraced in a department, or special commissions or boards, unless otherwise provided for in this Article, proposals for the same shall be first advertised for, in two or more daily newspapers published in Baltimore City, for not less than ten nor more than twenty days, and the contract for doing said work or furnishing said supplies or materials, shall be awarded by the board provided for in the next section of this Article, and in the mode and manner therein prescribed.” Section 15 was as follows: “All bids made to the Mayor and City Council of Baltimore for supplies or work for any purpose whatever, unless otherwise provided in this Article,.shall be opened by a Board, or a majority of them, consisting of the Mayor, who shall be President of the same, the Comptroller, City Register, City Solicitor, and President of the Second Branch, which Board, or a majority of them, shall, after opening said bids, award the contract to the lowest responsible bidder. The successful bidder shall promptly execute a formal contract to be approved as to its form, terms and conditions by the City Solicitor, etc.” In the case of Packard v. Hayes, supra, the Commissioner for Street Cleaning advertised for proposals “for the collection and disposal of garbage, dead animals, ashes and miscellaneous refuse in the city,” and stated in the advertisement that specifications and proposal blanks could be ob ⁶¹⁷ tained from the office of the commissioner. These specifications contained the provision that “each bidder must submit with his bid the scheme of garbage disposal which he proposes to. establish, marked so as to* correspond to the proposal which it is intended to accompany, and including such plan, specifications and other information as may be necessary to enable said commissioner to determine the feasibility of it.” The specifications also made provision “for six different proposals.” When the bids were opened it was found that the lowest bidder did not accompany his bid with a proposal for any sanitary scheme for disposal of garbage, etc., but proposed to move it to and use it as a fertilizer on his farm, or to reduce it according to any scheme of reduction that the Commissioner of Street Cleaning should approve.

His bid was not considered, and the Commissioner of Street Cleaning, to' whom the bids were referred by the Board of Awards, reported that the bidder did not comply with the specifications because he did not present any sanitary scheme of disposal as was required. The next lowest bidder, the appellee, proposed to collect and remove the garbage to a suitable place in or out of the city and there reduce it by a method then in use in Syracuse, New York, or with such modifications of that method, or by such other method as the Commissioner of Street Cleaning should approve. No plan of the system proposed to be used was filed by the bidder, but later he sent to the commissioner and to the board plans and specifications of a system for reducing the garbage in use in Detroit. All of the bidders proposed a different system for the reduction and disposal of garbage, and the contract was awarded to the appellee according to the sixth proposal provided for in the specifications.

Thereupon the appellant, on his own behalf as a taxpayer and on behalf of other taxpayers, filed a bill of complaint for an injunction to restrain the carrying out of the contract upon the ground “that the requirements of the charter,” as expressed in the sections we have referred to> “were not observed in awarding the con ⁶¹⁸ tract ; and that the same was not awarded according to competitive bidding as therein contemplated.” In disposing of the case, the Court, after stating that the power of the Board of Awards was limited by section 15 to-awarding the contract to the lowest responsible bidder; that, it had no power to make a contract other than that contemplated by the specifications, and that no such power or authority was vested in any other city official after proposals are-made in response to advertisement for them, said: “Necessarily, then, all the essentials that the municipality designs-that the contract proposed to be made shall contain, is to be-determined before proposals are invited and are to be placed before the bidder as the basis of his bid. Otherwise there would be no standard by which bidding could be made with the definiteness and precision which would leave nothing to be done except to ascertain the lowest bid. And it may be-said there could be no effective competition in bidding which it- was the evident design of the provisions of the charter we are considering to secure. That proposals for contracts-under these provisions should be made by bidders with knowledge of and with reference to all the essential elements-of the contract into which they are invited to enter is enforced by other considerations.

IIow otherwise could the Board of Awards perform its only other function in disconnection, after declaring a party the lowest