Opinion
Page __
__ Cal.App.2d __338 P.2d 258EAST BAY GARBAGE COMPANY, a corporation, Plaintiff, Cross-Defendant and Appellant,v.WASHINGTON TOWNSHIP SANITATION COMPANY, a corporation, Defendant, Cross-Complainant and Respondent.Civ. 18236.California Court of Appeals, First District, First DivisionApril 28, 1959Rehearing Denied May 25, 1959.
Hearing Granted June 24, 1959.
[338 P.2d 259] Quaresma & Rhodes, Fred A. Avera, Fremont, for appellant.
Bernard M. King, Fremont, for respondent.
HANSON, Justice pro tem.
This is a suit brought by the plaintiff East Bay Garbage Company, a corporation, to obtain an injunction to restrain (1) the defendant Washington Township Sanitation Company, a corporation, from soliciting customers and from collecting and disposing of garbage in that area of the Union Sanitary District which formerly comprised the Irvington Sanitary District and (2) for damages and loss of profits.
Defendant answered and filed a cross-complaint seeking (1) a similar injunction against the plaintiff, (2) dismissal of the complaint, (3) a declaration that the contract between the plaintiff's predecessor and the Irvington Sanitary District is null, void, and of no effect, and (4) for damages and loss of profits. The plaintiff filed an answer to the cross-complaint.
The matter was then submitted to the trial judge upon an agreed statement of facts which set forth the legal issues involved.
The court entered judgment on defendant's cross-complaint granting it the relief prayed for, except that the court reserved, pursuant to a written stipulation of the parties the determination of the amount of damages until such time as the case could be heard and determined on appeal.
Both plaintiff's predecessor, the East Bay Garbage Company, a partnership, and defendant since prior to April 1955 have continuously collected and disposed of garbage within the area of the Union Sanitary District which formerly comprised the Irvington Sanitary District.
Prior to the incorporation of the City of Fremont on January 23, 1956, the Irvington Sanitary District had been formed and was functioning as such within its territorial limits. On February 17, 1955, its Board of Directors published a notice in a newspaper of general circulation soliciting proposals for the collection and disposal of garbage within the District for a ten-year period under an exclusive contract. Only one publication of this notice was made. Within the time allotted, the defendant and respondent Washington Township Sanitation Company, a corporation, entered a bid and the predecessor of the East Bay Garbage Company did likewise. At the time the bids were opened and the contract awarded there were approximately 1,500 residential, commercial, or industrial establishments within the District, at which garbage was picked up on [338 P.2d 260] a regular periodic basis. On its bid the plaintiff-appellant proposed to pay the District a flat sum of $1,200 per year for the first five years of the contract and $1,800 per year for the second five years. The defendant-respondent proposed to pay $1.50 per year for each unit serviced. The Board of Directors awarded the exclusive contract to the plaintiff-appellant.
Thereafter on January 23, 1956 (about eleven months later), the City of Fremont was incorporated and as a result the City's territorial limits completely encircled the territorial boundaries of the Irvington District. About two months thereafter the Irvington District was consolidated with and became a part of the Union Sanitary District which before the consolidation had its territorial limits within what became the territorial limits of the incorporated City of Fremont.
Meantime on February 9, 1956, the City of Fremont adopted an ordinance (Ord. No. 15) which prohibited any person from collecting garbage within the city limits unless that person had either a contract with the City or a valid, subsisting contract which was in effect on January 24, 1956, with the Irvington Sanitary District. Additionally, the City on June 19, 1956, adopted an ordinance (No. 22) providing for the regulating and licensing of all businesses conducted within the city. The plaintiff never applied for or acquired such a license.
It is stipulated by the parties hereto that there are no factual issues in dispute, but that the legal issues are as follows:
1. a) Whether or not the contract between plaintiff's predecessor and the Irvington Sanitary District was a franchise as well as an exclusive contract, and
b) If it was, whether or not it could be attacked in the manner sought by defendant.
2. Whether or not as a result of the consolidation of the districts, the Union Sanitary District succeeded to all the rights, duties, and liabilities theretofore existing between Irvington Sanitary District and plaintiff's predecessor.
3. Whether or not plaintiff was guilty of unclean hands in refusing to obtain a business license from the City of Fremont pursuant to Ordinance No. 22.
4. Whether or not the Irvington Sanitary District was required to conform to the provisions of section 6515.5 of the Health and Safety Code in awarding the contract to plaintiff's predecessor.
5. Whether or not defendant's contract with the City of Fremont to collect garbage grants to defendant the exclusive right to collect garbage within that area of the city which formerly comprised the Irvington Sanitary District if it should be determined that plaintiff's contract is invalid.
6. Eliminated by stipulation of the parties.
7. The extent of damages suffered by the party, if any, entitled to an injunction.
Before discussing the issues on appeal it should perhaps be stated that the trial court found that all of the facts set forth in the agreed statement of facts were true and correct, and concluded: 1) that the contract between plaintiff's predecessor and the Irvington Sanitary District constituted a franchise as well as an exclusive contract; 2) that section 6515.5 of the Health and Safety Code applies to said franchise and exclusive contract; 3) that section 6515.5 requires the District to publish a notice requesting bids once a week for two consecutive weeks; 4) that said section requires that the district award the contract to the lowest responsible bidder; 5) that since the fees to be charged the residents of the District are all uniform, the lowest bidder is the bidder who pays the largest sum to the District for the privilege; 6) that because said section was not complied with by the District, the franchise and exclusive contract is void; 7) that because it is void defendant can attack its validity in an action for an [338 P.2d 261] injunction and declaratory relief where it can show a legal right to collect and dispose of garbage in the area in question; 8) that Ordinance No. 15 of the City of Fremont prohibits plaintiff from collecting and disposing of garbage in the area for the reason that plaintiff does not have a contract with the City as required by said Ordinance; 9) that the April 10, 1956, contract between the City and defendant's predecessor gave the franchise to collect and dispose of garbage in the area to defendant's predecessor in title; 10) that defendant is entitled to damages from plaintiff for its loss of profits, etc.; 11) that defendant was entitled to an injunction on its cross-complaint; 12) that as a result of the consolidation, the Union Sanitary District succeeded to all the rights, duties, and liabilities heretofore existing between the Irvington Sanitary District and plaintiff's predecessor; and 13) that plaintiff was not guilty of unclean hands for failure to obtain a license under the provisions of Ordinance No. 22 of the City of Fremont.
In view of the challenge to the rights, powers, authority, and duties of sanitary districts, we pass at once to a recital and appraisal of the material provisions of the Sanitary District Act of 1923 as amended. Health and Safety Code, secs. 6400-6917.
The act gives a district the power to 'collect waste and garbage' (sec. 6518.5); to 'make and enforce all necessary and proper regulations for: (a) The removal of garbage * * * [and] (c) All other sanitary purposes not in conflict with the laws of this State' (sec. 6521); 'It may do any act necessary or proper to the complete exercise and effect of any of its powers, or for the purposes for which it is formed' (sec. 6522), 'It may make and accept contracts * * * that, in the judgment of the board, are necessary or proper in the exercise of any of the powers of the district' (sec. 6515).
The powers thus enumerated may be classed, in part, as statutory powers and in part statutory police powers. But quite apart from these powers the District as an entity of the state is vested with the police power of the state in the field which we are here discussing. In short, as was said in California Reduction Co. v. Sanitary Reduction Works, 9 Cir., 126 F. 29, 34-35, a case dealing with a garbage contract: 'One thing, however, is certain: that everything which, from its nature and surroundings, is, or is liable to become, a menace to the public health or public safety, is a proper subject to be dealt with under the police power of a state. This case comes within that class. The power to make the law necessarily carries with it the power to judge of its necessity, expediency, and justice, and, primarily at least, of the reasonableness of the means and methods used to accomplish the end sought to be obtained. Courts have nothing to do with the wisdom, policy, or expediency of the law. The courts are only authorized to deal with the question of the power of the Legislature or municipality to pass the laws or orders in question, and determine whether they are valid, and, if so, to construe their provisions. There their duty ends.'
As the District was granted the express power to collect and dispose of garbage, it necessarily had, even without the other statutory powers given, the implied power to contract to have the work done by others by virtue of its police power. It was within the power of the District to determine whether the District and its inhabitants would be best served by having one or more agencies do the work. In Smiley v. MacDonald, 42 Neb. 5, 13, 60 N.W. 355, 357, 27 L.R.A. 540, the court said: '[T]he removal of the noxious and unwholesome matter mentioned in the contract tends directly to promote the public health, comfort, and welfare, and is therefore a proper exercise of the police power; nor is the fact that, in this instance, the city has by constract conferred an exclusive privilege material. From the power thus conferred upon the city is implied the duty to determine the means and agencies best adapted to the end in view. The means adopted appear to be not only a reasonable [338 P.2d 262] and necessary regulation, but a judicious exercise of the discretion conferred upon the city. That the object of all such regulations can be best attained by entrusting the work in hand to a responsible contractor, who possesses the facilities for carrying it on with dispatch, and with the least possible inconvenience to the public, is apparent to all. * * * The alleged excess of power is a mere sanitary measure, as obviously so as the familiar and necessary quarantine for the detention of persons exposed to contagious diseases. In either case the privilege, although exclusive, is but an incident to the proper exercise of the general police power of the state.'
Whether the contract entered into between the predecessor of the East Bay and the Irvington Sanitary District is to be classed as a franchise as well as an exclusive contract seems to us immaterial to a decision of this case on the merits. The trial judge, as has already been stated, found that the contract was a 'franchise as well as an exclusive contract,' and we are not disposed to disagree.
'The term 'franchise' has several significations, and there is some confusion in its use. We might concede, for the purposes of this opinion, that the rights and privileges conferred upon appellee are not, in the strict sense of the term, a franchise, yet it must certainly be admitted that they are special rights and privileges in the nature of a franchise, which create a valid contract which the courts should sustain.' California Reduction Co. v. Sanitary Reduction Works, supra, 126 F. 29, at page 40.
It is a well-established rule that a court must have a jurisdiction of the subject matter of a suit and of a person in order to take action against him, as for instance, to enter a judgment. But that rule is not applicable where the action taken is by a legislative entity, in its legislative capacity. 'When legislative power is vested in a municipal board, acts done in the exercise of that power are acts of legislation, and should be recognized as such by the courts. * * * the granting of a franchise is a legislative act * * *. If the granting of his franchise be a purely legislative act, then there was no exercise of judicial functions upon the part of the board in making the grant, and clearly no excess of jurisdiction.' People v. Board of Supervisors, 122 Cal. 421, 423, 55 P. 131, 132.
In the case before us, respondent contends that the contract between the appellants' predecessor is void under section 6515.5 by reason of the fact (1) that there was only one publication of the notice instead of two as required by that section and (2) that the contract was not awarded to the lowest responsible bidder as required by the statute. Upon those grounds it contends that it could sue the appellant directly to have the contract declared by the court to be void, whether it be classed as a franchise, or not, and to have the appellant enjoined from collecting and disposing of garbage in the area which formerly comprised the Irvington Sanitary District.
Whether the section is applicable to a case such as this is of major importance in that if it be inapplicable the case must be reversed for that one reason alone. Hence, we proceed at once to discuss that issue.
It is a well-known fact that governmental entities are restricted by constitutional or legislative provisions or both from entering into contracts which may cost the entity more than a stated amount, unless the contract is entered into on a competitive bid basis and then only, as a rule, to the lowest bidder. Section 6515.5 is typical of such statutes.
But in the case before us the District was not seeking to have work done for it of a character for which it would have to pay moneys out of its treasury, but instead it was asking for money bids for a privilege it was ready to grant to the highest responsible bidder. It received offers by two bidders who agreed to pay to the District moneys in accordance with the terms of their bids.
[338 P.2d 263] Section 6515.5 reads as follows: 'If the total cost of any work exceeds two thousand five hundred dollars ($2,500), the district shall publish a notice requesting bids therefor by publication for once a week for two consecutive weeks in a newspaper of general circulation in the county in which the district is located and award the contract to the lowest responsible bidder. The notice shall state the time and place for receiving and opening of sealed bids and discribe in general terms the work to be done.
'If more than one bid is received, the board shall award a contract, as specified in the notice requesting bids, to the lowest responsible bidder. If only one bid is received, the board may either accept the bid or reject it and enter into a contract as provided in Section 6515 or order the work done by day's work. If no bids are received, the board may either enter into a contract as provided in Section 6515 or order the work done by day's work.
'This section shall have no application where the work is done pursuant to those acts set forth in Section 6541 and 6541.5 of this code.
'Any contract to which this section applies that is not let pursuant to this section is void.'
We are not permitted to add to or subtract language from a statute nor to construe it in a manner contrary to the language used. We think it self-evident that the statute is not applicable to the facts of the case before us. For that reason it follows that the contract of the plaintiff is valid and that the plaintiff and not the defendant is entitled to an injunction and damages.
Judgment reversed.
BRAY, P. J., and FRED B. WOOD, J., concur.
Hearing granted; PETERS, J., not participating.