author: WILDMAN, J.

text:
    CONTRACTS — MUNICIPAL CORPORATIONS — PATENTS.
    [Lucas (6th) Circuit Court,
    March 31, 1906.]
    Haynes, Parker and Wildman, JJ.

       William L. Holbrook v. Toledo (City) et al.
    Municipality may Contract for Patented Articles, notwithstanding Statutory Requirements as to Competitive Bidding.
    Competitive bidding is not necessarily narrowed, but may be broadened,, by admission to the competition of material which monopolized by reason of patents; and in the exercise of a sound discretion it is competent for the proper city authorities, in advertising for bids for a street improvement, to call for material which is covered, or the assembling of which is covered, by patents.
    [Syllabus approved by the court.]
    .Appeal from Lucas common pleas.
    Doyle, Lewis & Schaufelberger, for plaintiff-.
    U. G. Denman and Kinney & Ne'-wton, for defendants;

       Affirmed, without report, Toledo, St. L. & W. Ry. v. Turney, 73 Ohio St. 400.

   WILDMAN, J.

This is a case calling, perhaps, for the application of some of the principles which have been announced in the case of Yaryan v. Toledo, 28 O. C. C. 259, just decided by this court. The case before us, however, involves the additional and interesting question as to whether the city in calling for bids for a street improvement — in this case a pavement — may advertise for and accept a construction, the materials entering into which or the method and proportions of assembling which, are covered by letters patent.

The petition in this ease, while in no way alleging or suggesting any corrupt intent on the part of either the city officials or the contractor to whom the contract has been let — The defendant Streieher — contends that the letting of the bid and the making of the contract are an infraction of the spirit of the law which provides for competitive bidding.

It is urged that to permit a proffer of an improvement the right to make which and dispose of it to the city inheres in some individual or company, deprives all other persons of an opportunity for legitimate competition and deprives the city of the benefit ■of such competition. The case is before us on appeal and was submitted upon a demurrer to this petition, the demurrer alleging that the petition fails to set forth facts stating a cause of action. After the formal aver-ments of the petition, which I need not read, and in which proceedings ■are for the alleged improvement of Spielbusch avenue, in this city, and ■Cherry street market place, for, it is alleged that the bid of one Henry Streieher was accepted and an agreement entered into therefor; that said agreement is void “and involves a misapplication of the funds of said •city and an abuse of its corporate powers” for the reason that the specifications for the construction of said improvement call for Warren’s bitulithic pavement exclusively, and that certain elements entering into said pavement are covered by letters patent issued by the United States government to the Warren Brothers Company, a corporation; “that the machinery and appliances for laying said pavement, and the process •of mixing the material used in said pavement are also covered by letters patent issued by the United States government; that all of these patents are owned exclusively by said Warren Brothers Company, and by reason thereof no-person can make use of any of the machinery, appliances, methods or materials so covered by said letters patent save and except upon the consent of said Warren Brothers Company to such use upon such terms as the said Warren Brothers Company may see fit to exact, by reason whereof there could not be- and was not such competitive bidding for the improvement of said avenue and market place as is contemplated by the laws of the state of Ohio; that the city of Toledo had not, before said bids were received or before said agreement was executed, acquired the right to secure, at a reasonable cost, the right of said patents or any of them, with respect to said improvement, for any successful bidder for the work, and the bidders were not placed by said city, in that respect, on substantially equal terms; that while the said notice to contractors called for bids on various kinds of pavement, the said board of public service expressly reserved the right to reject any and all bids for such kinds of pavement as were open to equal and fair competition and accept the bid of said Henry Streieher for the only kind of pavement which was controlled exclusively, by said Warren Brothers Company and permitted no competition.”

Again it is alleged “that said specifications called for the use of a. patented and monopolized material and process, owned and controlled exclusively by Warren Brothers Company, which tended to stifle competition among bidders on said improvement and to prevent the letting-of said contract to the lowest and best bidder as required by the laws of this state.”

Upon the basis of these and some other alleged facts incidental thereto, the plaintiff prays for an injunction to restrain the defendants and each of them (the defendants named other than the said eity and said Streicher being members of the board of public service of the city of Toledo) “from taking any steps or performing any act under the terms of the agreement hereinabove set forth, and enjoining the said ■Henry P. Streicher from commencing or doing any work whatever upon said Spielbusch avenue and Cherry street market place, under said agreement” and further praying “that upon final hearing the. said agreement for said improvement may be declared to be null and void and the defendants and each of them perpetually enjoined from,performing or attempting to perform the same, and for. such other relief as may be proper and equitable in the premises. ”

The. question primarily involved is almost a novel one in Ohio. It has not been expressly passed upon in any adjudication which has been called to our attention, or which by considerable research we have been able to find. It has been made a matter of dictum in,three cases at least in the state, but in no one of these eases does the question seem to have been discussed or is it expressly decided. The case of Hastings v. Columbus, 42 Ohio St. 585, does not decide it. There the city, prior to the advertising for bids, had acquired the right to the use of a patent, and the Supreme Court was not called upon to determine what would have been the effect of an attempt to construct such a pavement after the advertising for bids and the letting of a contract without having previously acquired such right, and the point decided by the court -which bears even incidentally upon the question at bar, is made the subject of but brief mention and without any special, discussion of the principle. The language on the subject is found in a paragraph on page 595. I will not read it. '

In Polhamus v. Board of Ed. 11 Circ. Dec. 366 (21 R. 257), Judge Laubie furnishes us with a dictum indicating his opinion that a city would not have a right to accept a contract for a patented improvement. But in so .expressing his individual opinion he uses phraseology almost conveying the 'impression that had the question been one involved in the case, the decision would have been adverse to the opinion expressed by him, by reason of lack of accord with his views entertained by the other members of 'the court. This fact is not so clearly indicated by him, however, that it is well to place much emphasis upon it.

In a case decided by our own court, State v. Toledo Bd. of Ed. 7 Circ. Dec. 338 (14 R. 15), we have a somewhat emphatic expression by Judge King of his judgment that our law does not prohibit the advertising for the use of a patented invention for the heating and ventilating of public structures. While, as in these other cases, the question here was not directly involved, I may delay for a moment to invite attention to some of his language) merely because it is the language of a, former judge of our own court. The proceeding was one for mandamus,, brought by the Bryce Furnace Cb. to compel the letting of a contract to that company. The city had accepted a bid made by the Smead Furnace & Foundry Co., and was about to award a contract to that' company, but the Bryce Furnace Company claimed that it was the lowest and best bidder and was insisting that the contract should be let to it. On page 341, Judge King says:

“The apparatus is known in these contracts, and in the exhibits as “The Bryce heating and ventilating apparatus.” And it says (speaking of the petition) that the heating and ventilating system provided for in the contract is the fan blast system, which provides for “heating the following rooms with warm air,” and described all th« rooms in the building, including the basement. A perusal of that is sufficient to indicate that this is h system of which this corporation owns the right, although nothing is said about' pátents. It is'a system which it proposes to put into the building for heating and ventilating those various rooms. And from the description given in the bid of the Smead Co., and from the allegations of the petition, it is plain enough that it is also a system which it devises and of which it- is the proprietor.”

On page 342, the judge says:

“We have had occasion before to say in matters of this kind, and further reflection only strengthens bur opinion upon it, that this suit has not yet been so framed as that the discretion which the law has given to these boards can be controlled, either by writ of mandamus or by an injunction, when it comes to the question of selecting añ apparatus that is in the control of a single individual or a single company or firm.”

On page 343, he says:

“But after all, the board is not required to finally adopt a system whose owner has bid a lower sum for putting into a public building than the owner of some other system. It can leave the question of determining finally what system it will adopt for consideration after all the bids are in. The question of price, manifestly, might have some influence with the board of education in determining which one it would accept, if all of them, or two or three of them are substantially equal in, merit, but it would not be binding on the board to accept one because it was the lowest bid, although they might consider it. It still has the right which the law has given it, to reserve the determination of the particular system it will adopt until after the bids are opened, especially where those systems are largely covered by patents; and we fail to see any way in which the law controls that discretion in the board of education. * * * But for these things controlled by patents the market is not free and open. It is controlled by a single owner. We know of no way in which the law can regulate that. We do not believe that you can control the discretion of tñe Doard of education to adopt the system after the bids are in, nor do we think it would be wise to do it. So long as it is the privilege of the inventor to secure from the United States government the right to his own inventions, and so long as the law protects him in that right, we see no object in saying that because some other person has a different patent, the owner of which bids a lower sum than the owner of this one, the discretion of the board to adopt one or the other should be controlled nor do we think it can be.”

I hardly know what the judge meant by this last pirrase, or some of these last phrases, unless he had it in mind that the exclusive right to make and vend an article with regard to which the United States •government has issued patents and which right is protected by the United States law, may not be the subject of restriction even by a legislative enactment of a state. Something along this line is quite earnestly urged in the extensive pamphlet brief which was submitted by one counsel as a part of his argument in the present ease, made by Edwin L. Harpham, counsel for the city of Evanston in a case pending at the time' of this brief in the Supreme Court of Illinios. I am not much disposed myself to accept, without a good deal of consideration, the position that the state might not restrict the use of a patent right by a municipality in the state of Ohio; the question before us does not necessarily involve it; the question is, rather, as to whether in the course of the powers conferred upon the municipality by the legislature, we find any expressed or implied qualification as to the use of those powers in the selection of material or in the manner of construction of an improvement which a municipality is authorized to make. The power of the city to pave streets is broadly given by the statute and in it there is set forth no express qualification of that right limiting the exercise of the power to the adoption of such means as are not exclusively controlled by individuals or concerns. So that we are driven to examine this question in the light of such adjudications as wé can find and such principles as we may be disposed to adopt to determine whether or not the principle of public policy invalidates the action of a city council in not ■confining its choice to articles which are open to general use and not controlled exclusively by patentees or otherwise.

The sole question is: Is the restriction which is contended for by counsel for the plaintiff to be implied from the law applicable to this case? As I have already intimated, no bad faith is alleged in the petition, or even hinted at, but it may be proper to inquire whether the purpose of the law which makes provision for competitive bidding for such contracts, is destroyed by the advertising for or the acceptance of such a contract as the one let to the defendant, Streicher, in this proceeding. The object of the law «probably is two-fold — I refer to the law making provision for competitive bidding. It is, on the one hand to enable the public to obtain that which by reason of its price and quality is the most desirable for it as an investment, precisely as an individual in buying .an article will take into consideration both the price and the quality; and the other object of the law is to prevent as far as it may, improvidence and corruption on the part of municipal authorities, and it is fair to inquire as to what is the effect of permitting a board of public service in making its choice to take into account articles which are the subject ■of exclusive use by one or more individuals, as bearing upon these two ■objects of the law.

I shall discuss a little more fully not only the object, but what in my judgment is the result of such restriction as is here contended for. But, before reaching that, it is well to say that while in our own state, no rule upon the subject has been expressly established, in either the court of last resort or-any of the lower courts, so 'far as we have been able to find, there have been numerous adjudications, many of them entitled to the highest respect, in the courts of other ■states. As stated by counsel on behalf - of the city in oral argument, the controversy seems to have been started in two early cases, in Michigan and in Wisconsin — the one in Wisconsin being decided a little earlier than the other, and in each of those cases there was a division of opinion ■on the part of the judges who rendered the decision. So far as time would permit, we have made examination of the numerous cases cited— not quite so critically, perhaps, as we should have been glad to do in all instances, — but we have not felt altogether compelled to go through the' reasoning of all of the judges in the decisions of the various states, because of the conceded fact that there is an irreconcilable conflict of authority between and among them. In the brief of counsel in the ease-of Prindle v. Evanston, the case to' which I have already referred, I find them summarized in a manner which, so far as my investigation goes, seems to be justified. I have examined a number of cases with a view to ascertaining whether he was correct in his conclusions as to the results-of adjudications in the several states. On page 28 of this brief he says:

“The Wisconsin view, as expressed in Dean v. Charlton, 23 Wis. 590, was that where the statute requires the contract to be let to the lowest responsible bidder, such statute applies to patented articles, and no competition is possible. That view, however, has been materially modified by a later decision. Kilvington v. Superior, 83 Wis. 222 [53 N. W. Rep. 487; 18 L. R. A. 45].
“The Michigan view is that where the statute requires the contract to be let to the lowest responsible bidder, such statute applies to patented articles and all the competition possible is required.
“The New York, Pennsylvania, New Jersey, California and Tennessee view is that where the statute requires the contract to be let to the lowest responsible bidder, such statute has no application to the-case of patented articles; that such statute was intended to regulate the exercise of and not to limit the power to purchase what was desired.
“The Missouri view is that where the statute requires the contract to be let to the lowest responsible bidder, such statute does not prevent the use of a patented article where it appears from the testimony that no other article is equally as good.
“The federal court view is that the courts have no right to review the discretion of the municipality in the selection of paving materials, even if such materials are patented.”

' A large number of cases might be cited, and I have been tempted to incorporate them into this opinion for such reference as it might be-worth the while to make to them later, but I will not encumber it with further citations of these numerous decisions, because, after all, in our own state it becomes a question of principle and a matter of reasoning to determine what rule should be adopted in view of our statute. It. may be said in passing that in many of these decisions of other states, indeed in the most of them that I have had occasion to examine, the-phraseology used in .the statutes is not that the contract must be let or' may be let to the lowest and bést bidder but it must be let either to the' lowest bidder, or, in most cases perhaps, to the lowest responsible bidder.. Probably in all cases where the statute provides that it shall be let to> the lowest bidder it contemplates responsibility as essential before the-letting of the contract. It is contended by counsel for the plaintiff that the assertion made that the early Wisconsin view expressed in Dean v. Charlton, supra, had been modified by a later decision in the case of Kilvington v. Superior, supra, was a contention which could not be sustained in view of a type-written transcript of a still later' opinion decided by the supreme court of Wisconsin and which typewritten opinion has been handed up as a part of the argument of counsel, for the plaintiff. This late case to which I have made reference is that, of Allen v. Milwaukee. It may not be very important to follow to its ultimate length the inquiry as to how the supreme court of Wisconsin has finally determined this question, but it is interesting, in view of the fact that the supreme court of Michigan has steadfastly adhered to the opinion announced by Judge Cooley, the early, case to which reference has already been made, Hobart v. Detroit, 17 Mich. 246 [97 Am. Dec. 185]. In Kilvington v. Superior, supra, page 227, I find this comment upon Dean v. Charlton, supra, and some other adjudications subsequently had in the state of Wisconsin, touching this question. I read:

“Upon the authority of Dean v. Charlton, 23 Wis. 590, it is contended that, as the mode of building the crematory was a patented one, the contract was void, on the ground that there could not be fair competition in bidding for the work, which by the charter was required to be let to the lowest bidder. Rev. Stat., Sec. 921. The case of Dean v. Charlton was decided by a divided court, and there was a vigorous and able dissenting opinion by Chief Justice Dixon. The legislature subsequently validated the assessments so held void in that case, Mills v. Charlton, 29 Wis. 400 [9 Am. Rep. 578]; Dean v. Borchsenius, 30 Wis. 236, the validity of this legislation was sustained. Since that time the direct question involved in that case, which was in respect to assessments against abutting lots for paving the street, has. not been before the court; but in Dean v. Charlton the majority of the court, after commenting upon the ease of Harlem Gaslight Co. v. New York (Mayor), 33 N. Y. 309, expressly disclaimed deciding whether the city might not have contracted for laying such pavement at its own expense, under its general municipal powers, which is really the question here presented. In view of the legislation which followed Dean v. Charlton, and the fact that it was decided by a divided court, and the general tenor of subsequent decisions, and the further fact that patented! methods and processes now enter so largely into various classes and kinds of public work, we are not disposed to extend the rule of that case beyond the particular point there decided. In Hobart v. Detroit, 17 Mich. 246 [97 Am. Dec. 185], and Motz v. Detroit, 18 Mich. 495, 515, decided at about the same time, a contrary conclusion was reached; and in Nicholson Pavement Co. v. Painter, 35 Cal. 699, and Burgess v. Jefferson, 21 La. Ann. 143, the rule of the majority of the, court in Dean v. Charlton was sustained. Since then, in Dugro, In re, 50 N. Y. 513, the question has been decided in conformity with Hobart v. Detroit, supra, and other like cases; and in Yarnold v. Lawrence, 15 Kan. 126, 129, 131, Brewer, J., notices the diversity of judicial opinion on the question, and is inclined to favor the views of the courts of Michigan and New York. Baird v. New York (Mayor), 96 N. Y. 567.’'

There can be no escape from the conclusion that the judge who uses that phraseology is himself doubtful of the correctness of the principle enunciated in the earlier case of Dean v. Charlton, supra, and he expressly says, speaking for the whole court, that they are not disposed to extend the rule in that case beyond the particular point there decided. In the recent ease decided by the Wisconsin supreme court, which, by the way, pertains to a bitulithie pavement, we are informed that subsequent to the Dean v. Charlton, supra, the legislature of the state had made special provisions as to how and when patented improvements might or might not be used. It became a matter of special legislative enactment, so that possibly it was not important for the supreme court in either of the cases, the one in Kilvington v. Superior, supra, or Allen v. Milwaukee, supra, to decide the precise question which is involved in the case now under consideration. It is enough to say that there has been a weakening in the judicial opinion in Wisconsin as to the impotency of a municipality to avail itself of a patented improvement irrespective of statutory enactments expressly referring thereto. It may be remarked that the Wisconsin rule as it started was based upon a statute which provided that a contract should be let to the lowest responsible bidder, and I shall have occasion to refer a little later to the power- which is given the board of service in Ohio in the construction of a like improvement, to let it to the lowest and best bidder, as bearing upon the question as to whether a little more liberality is not given, or a little wider scope, to the exercise of authority by the board of public service in Ohio than was given to the municipal authorities in Wisconsin under the statute to-which I have referred. We have in Ohio numerous adjudications drawing distinctions between governmental and what may be called proprietary or business powers in municipal corporations. .This matter seems to relate more largely to the exercise of business, powers — sucb powers as an individual might exercise in bis own be" half — in the protection of private interests, and at the outset the query naturally arises if an individual may buy that hind of a thing which suits his taste, which is best adapted to his needs and requirements, irrespective of the question whether it is or is not patented, why cannot one hundred thousand, or two hundred thousand individuals who have joined in a great common project, do the same thing? If one may do it, why may not many? To be sure there is no restriction upon the exercise of all sorts of powers by an individual, where restrictions may be called for to prevent improvidence or corruption on the part of trustees of a municipal society; but after all, if it is a benefit — and it surely is oftentimes — for an individual to obtain an article which is protected by letters patent, even if he has to pay a higher price for it, so it is surely a benefit to an aggregation of individuals sometimes to do the same thing. In the case of Field v. Paving Co. 117 Fed. Rep. 925, it is held:

“Where a contract for the paving of a street with asphalt limited the kind of asphalt to be used to Trinidad asphalt, such fact, and the further fact that such asphalt was controlled by a single corporation, did not affect the validity of the contract.”

And in the determination of the question, the federal judge announcing the opinion for the court, on page 929 of the report, says:

“An individual certainly has the right, in the erection of an improvement, to get that which he believes the best, and that which he prefers, regardless of the reason; and he should not defeat a recovery by showing that in fact something else was as good or better, or that the vendor had a monopoly. And why should not the same holding he made as to a city? Can it be so that because the city concludes, although wrongly, that Trinidad is the best asphalt, that its contract must be canceled on a showing that the Trinidad is not the best, and that it is the subject of a monopoly?”

In other words, it is not for the court to say which is the best. Our Supreme Court has expressly held that as to these discretionary powers which are given, it is for the body to which the discretion is given and not for a judicial tribunal, which passes upon the procedure to determine which is best. It is not for this court, in other words, to exercise the discretion as to the choice of a pavement, and unless in the exercise of the powers given to the municipal corporation or the board clothed with the power and acting for the municipality, such body has departed from the law or has exceeded the powers to it given, this court has no right to interfere. Now it may be said when we are considering this question as to whether free, fair and wise competition is interfered with by permitting the introduction of a patented article, that the patented article may be cheaper as well as better. It sometimes happens so. A person may have discovered a method by which some article may be manufactured lby a patentable process far more cheaply than it could have been before-such discovery, and to exclude him as a competitor when the question of the adoption of a patented or of a nonpatented article in improvements is involved, may be to prevent the purchase by the city of what it requires at the lowest price, and we shall haVe a case of the city being compelled to take the unpatented article and pay for it a good deal more than perhaps it would have been necessary to pay for a thing which, although protected by letters patent might well be sold by the exclusive owner at a lower price, because, perhaps, of a lower cost of production.

It has seemed to me in the consideration of this question that the ruling out of competition which involves both patented and unpatented articles is to prevent competition; that it interfers with competition because the scope is not so broad. Here we have a board of public service, and assuming its honesty of purpose and that it is squarely endeavoring to obtain that which is best under all the circumstances for the people of this municipality, advertising for the construction of a pavement and offering to bidders the choice of a number of kinds of pavement and included among them is this bitulithic pavement. Now, if the bitulithic pavement were entirely excluded from the category of those which might be under consideration, or the number with regard to which proposals could have been made to the city, there would be h lessening of competition to that extent — instead of fourteen alternative there would be thirteen, and if there were other patented materials included in the category, it would be still further lessened and instead of making a broader competiton we think it makes a restricted one.

The issuing of letters patent does not confer the only kind of exclusive use or the only kind of a monopoly that may be acquired or owned by any individual or any group of individuals. There are monopolies that grow out of circumstances inherent in nature; there is a monopoly which pertains to a particular skill or particular expertness, a native genius enabling him to do a thing better than any other man can do. There is the monopoly which belongs to a proprietary interest in some particular coal mine, in some particular gravel pit, or other source from which the products of the earth may be extracted for the benefit of man. Shall it be said that a municipality which desires to obtain a large quantity of coal may not encourage bidders among the owners of all the coal mines, and yet those who are offering their pro-posáis will have no power to furnish to the city some particular kind of coal which comes from some particular mine, owned by some one individual, coal which may be the best of all and possibly the only coal just adapted to the needs of the city, for some power plant or other public use. If that is excluded, then the city is not permitted to avail itself -of the best which can be had in the market. As has been said in the Yaryan case by my associate, the competition, under our law, is threefold: it involves the price, the responsibility of the bidder, and the ■quality of the thing offered. And if you exclude from consideration anyone of these things, you will, as it seems to me, violate the spirit and purpose of the law.

In the old Sec. 799 (Lan. 1763) Rev. Stat., we had a provision that where a contract was let as an entirety by' a municipality it must be let to the lowest bidder. When it was let in separate parts, having regard to the different trades which might enter into it, it was provided that it should be let to the lowest responsible bidder, and while Judge Doyle was on the supreme bench he considered this Rev. Stat. 799 (Lan. 1763), in one of the eases, not now before me and to which it is perhaps not worth while to make a special citation — it is enough to say that under the municipal code adopted in 1902, 96 O. L. 96, we have a repeal of all prior enactments inconsistent with this new municipal code. Among those enactments, in my judgment, is this, Rev. Stat. 799 (Lan. 1763), which is, in spirit, repealed by See. 143 of the municipal code. Now the statute provides, not only that the board of public service must accept the lowest and best .bid, but it may reject “any or all bids.” It may reject any one or any thirteen, and leave the fourteenth, if in its judgment that is the lowest and the best. Taking the two provisions together, the court is not inclined to adopt the view of counsel for the plaintiff, that in the provision that the contract must be let to the lowest and best bidder, reference is had only to the responsibility of the bidder and not as well to the quality of the thing proferred.

It has been very earnestly urged, and perhaps the argument is made upon the claimed implication in the case in Hastings v. Columbus, supra, to which I have referred, that the difficulties in the way of permitting a competitive bidding, including those with reference to a patented article, may be obviated by the city’s first procuring the right from the owner of a patent and then submitting to all bidders by advertising, the right to compete as to that use which the city itself has acquired. But, in our judgment, that would ordinarily be impracticable, for reasons which have suggested themselves to us even before we.found the matter somewhat dis: •cussed in one or two of the eases cited, incidentally; perhaps, but still discussed. An owner oí a patent is ordinarily, as common experience and observation teaches us, the one best qualified, by reason of familiarity with the construction, the exclusive control of a plant for its production, the acquired skill for the manufacture and furnishing of the improvement to give it to the city or other buyer upon the best terms and to carry out his proposal with the greatest efficiency, to the most complete satisfaction of the buyer. In other words, in the great majority of cases, and perhaps almost universally, the person who can make the best bid for a patented article is the owner or controller of the patent. But waiving this argument, it fairly be urged that if the city could buy the right to make use of the patented article, presumably ■bidders .could do the same; and, as suggested in some of these cases from other states, all that the bidder has to do to make his contract binding upon him is to agree with the city that he will furnish the article. Although patented and controlled by some other person or corporation, the city may hold him to it. There is no immorality in that; there is nothing contrary to law in it, if he has contracted with the city that he will procure the right and that he will then construct the patented pavement according to the terms of his contract.

In the absence of any provision in the Ohio statutes that a city may not let just such a contract as has been let here, in the absence of any provision in this statute such as we find in the statute with reference to the city of Cincinnati, which was cited to us, containing the express terms upon which a patented improvement may be used, we are of one mind that we ought not to read into this law the restrictions and qualifications for which counsel for plaintiff contend. Wherever the exclusive right to a thing is owned or controlled, it has seemed to us that the people of a city ought not to be deprived of an opportunity to avail themselves of a useful and valuable thing simply because it is so controlled. And this kind of monopoly which we guard by the issuing of letters patent is a monopoly which has been éncouraged, because it stimulates inventive genius and in the end results in great good to humanity. Not much encouragement would be given to the inventor of a patented pavement if his market were restricted" to individuals, if municipalities were shut out of the number of the purchasers of that which he has invented. Individuals do not ordinarily buy pavements. And the question then comes, whether it is public policy to discourage invention along this line which in the end may inure to the highest benefit of the cities. We have passed through very many stages of bad roads: from the old clay roads, the corduroy and the plank roads, through the divers forms of pavement. Now we have the. bitulithic pavement, which has been selected by this board of public service, and it has seemed to this court \nd to each member of it, that it is wise that the people who have organized themselves into municipalities should be free to avail themselves of every beneficent invention keeping pace with the world’s progress.

Under all the circumstances which have been disclosed to us and so ably presented in the arguments on behalf of the plaintiff and defendants, we have no misgivings in holding that the petition herein fails to state a cause of action, and accordingly, the demurrer will be sustained.

Parker and Haynes, JJ., concur.


source: Caselaw Access Project

license: Public Domain

text:
    ASSESSMENTS — TIME.
    [Lucas (6th) Circuit Court,
    March 10, 1906.]
    Parker, Haynes and Wildman, JJ.
    Toledo (City) v. Dolphus J. Marlow et al.
    1. Statutory Steps in Street Improvement Constitute “Proceedings.”
    The several statutory steps required for the improvement of a street by pavement or sewer constitute a “proceeding,” within the meaning of Rev. Stat. 79 (Lan. 98).
    .2. Statute in Force at Commencement op Proceeding Controls Rate op Assessment. 1
    The rate or amount of lawful assessment by a municipality for a street improvement such as a pavement or sewer, upon benefited or abutting property, is governed by the statute in force at the beginning of the proceeding.
    3. Preliminary Resolution Declaring Necessity op Improvement is Beginning oe Proceeding.
    The adoption of the preliminary resolution declaring the necessity of a street improvement such as a pavement or sewer, is, in the absence of a petition by property owners for the improvement the beginning of a proceeding, which is thereafter “pending” within the meaning of Rev. Stat. 79 (Lan. 98) and unaffected, in respect to limitation of rate of assessment by an amendatory act not expressly retroactive.
    [Syllabus by the court.]
    ERROR to Lucas common pleas court.
    C. S. Northup, city solicitor, and O. W. Nelson, for plaintiff in error.
    F. J. Flagg'and M. S. Dodd, for defendants in error.
   WILDMAN, J.

This case presents the question whether the preliminary resolution for the improvement of a street is the beginning of a proceeding, within the meaning of Rev. Stat. 79 (Lan. 98), so as to leave a limitation upon the amount of the assessment for such improvement as established by an act in force at the time of the preliminary resolution but amended thereafter, unaffected by the amendment.

The case is one in error from the court of common pleas, which, upon the petition of the defendants, Marlow and others, enjoined the collection of such an assessment. A demurrer to the petition having been overruled in the court of common pleas and no amendment to the petition being made, the court rendered judgment upon the demurrer, making the injunction theretofore allowed, perpetual.

The improvements contemplated are of two characters: one for a sewer and another for the paving of certain streets. The preliminary resolutions as to both were prior to a certain amendatory act passed April 21, 1904. Up to that time, under the municipal code, Sec. 53, 96 O. L. 40 (Rev. Stat. 1536-213; Lan. 3604), it was provided that in all cases of assessments the council shall limit the same to the special 'benefits conferred upon the property assessed, and in no case shall there be levied upon any lot or parcel of land in the corporation, any assessment or assessments for any or all purposes within a period of five years exceeding 33 per cent of the tax value thereof.

On April 21, 1904, this act was amended so as to change, the limitation from 33 per cent of the tax value to 33 1-3 per cent of the actual value of the property as enhanced by the improvements contemplated; the amendatory act containing no provision that it should be applicable to pending proceedings; and the sole question before us, presented by this petition and demurrer, is whether this amendatory act and the change in the limitation of assessment, affects proceedings in -which the preliminary resolutions were adopted by the council prior to the enactment of the amendment. As to the sewer improvement, both the preliminary resolution and the so-called improvement ordinance had been passed prior to April 21, 1904. As to the paving improvement, the preliminary resolution had been passed, but the other ordinances at that time required, had not been. The statute at that time, that is, before April 21, provided not only for a preliminary resolution as to. the paving, but also for a sort of intermediate ordinance, then an improvement ordinance, and finally an assessment ordinance. And in this case, as to the paving improvement, the preliminary resolution only had been passed prior to April 21. On April 25, the so-called intermediate ordinance was passed, although the law requiring it was repealed by the amendatory act. I say “so-called” because that is the term that has been adopted by ■counsel for convenience, and it may properly be used by the court in the same way.

Revised Statutes 79 (Lan. 98) provides that whenever a statute is. repealed or amended, such repeal or amendment shall in no manner affect pending actions or prosecutions or proceedings, civil or criminal, and when the repeal or amendment relates to the remedy, it shall not affect pending actions, prosecutions or proceedings unless so expressed, nor shall any repeal or amendment affect causes of such actions, prosecutions or proceedings existing at the time of such amendment or repeal unless otherwise expressly provided in the amending or repealing act. Provisions similar to this are found in some of these municipal statutes. There is one in the municipal code, but for the purposes of our inquiry, it is not necessary to consider any other provision of this character than that embodied in the section just referred to.

There is no dispute in the contentions of the counsel that 33 per cent of the tax value is the limitation as to the sewer improvement. There is no dispute that if the same limitation applies to the street improvement, the property cannot be assessed for both improvements beyond 33 per cent of the tax value. The only question, as I have said, is whether the law in force at the time of the preliminary resolution for the street improvement, or that in force at the time of the subsequent proceedings, governs the rate of the assessments.

There “is now no room for discussion whether these actions of the council are to be treated as “proceedings,” within the terms of Rev. Stat. 79 (Lan, 98). They have been recognized as such repeatedly by our Supreme Court. Perhaps in one of the earlier cases, the question was raised whether these matters constituted “proceedings,” within the meaning of the law; but that question was definitely determined and all controversy ended in one or more of the first adjudications on the subject.

But it is co'ntended by counsel for the <city that Rev. Stat. 79 (Lan. 98), has no application to the amounts of assessments, and that an. amendatory statute changing the limitation will go into effect, and govern the assessménts which may be made, although a preliminary resolution has been passed, notwithstanding a concession that as to the mode of proceeding the original statute will apply and the amendatory section not affect the proceeding in that regard. Much reliance is placed by counsel for the city upon what are known as the Seasongood and Shean cases, to which some brief reference may be made. I will not tarry long 'upon Shehan v. Cincinnati, 11 Dec. Re. 198 (25 Bull. 212), which was decided by a lower court and affirmed without report by the Supreme Court, because it seems to us from a consideration of the ease, that its decision was influenced rather by principles of estoppel, than by a construction of this statute. Certain parties had petitioned for an improvement, and after an assessment has been changed, they still having an opportunity to withdraw the proceedings, it was substantially held that they were estopped by permitting the proceeding to go on from disputing the validity of the higher assessment.

The case of Cincinnati v. Seasongood, 46 Ohio St. 296 [21 N. E. 630] held in terms, as we read in the syllabus:

“A municipal corporation having through its proper boards and officers passed a resolution and ordinance to improve a street, in its assessment of the cost and expense of the improvement upon the abutting property, it should be governed by the law in force at the time of the passage of its improvement Ordinance, with respect to the manner «of assessment and the rights and liabilities of the owners of abutting property.”

And it is largely upon this language and the ruling claimed to have been made thereby that the city relies for the proséeution of its claims in this case. An examination of the case shows that the question really arose between the limitation provided by law at the time when the assessment ordinance was passed and that in force at the time when both the resolution for the improvement and the improvement ordinances were passed. In other words, the amendatory act in that case was after the improvement ordinance, and no different rate or limitation of assessment obtained between the time of the passage of the preliminary resolution and the passage of the improvement ordinance; so that to hold that the limitation of assessment in force at the time of the passage of the improvement ordinance would apply and govern, was equally to hold that the limitation in force at the time when the resolution was adopted, “would apply, because it was the same limitation. The court held in that ■ease, however, that at the time of the passing of the resolution and the passage of the ordinance — and perhaps they rely more upon the passage of the ordinance than the adoption of the resolution — a vested right accrued to the property owners, to be assessed upon the basis of the law in force at that time, and not on one that was enacted later. And upon the general principle that the constitution prohibits the enactment of retroactive laws, they held that the legislature had no power after the adoption of the improvement ordinance, to change the assessment. I read from page 303 of the decision:

“Under the constitutional prohibition, the general assembly has no power to pass retroactive laws. Section 28, Art. 2. Every statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past must be deemed retrospective or retroactive.” Citing a number of earlier cases.

The court bases its conclusions upon this principle, without regard to the- provisions of Rev. Stat. 79 (Lan. 98) as to the effect of an amendatory act. On page 306, the judge delivering the opinion uses this language, expressly disavowing any intention to pass upon the provision to which I have referred, Rev. Stat. 79 (Lan. 98).

“Entertaining as we do the opinion that the defendants in error acquired a vested right under the act in force at the time of the passage of the improvement ordinance, which, by virtue of the constitutional inhibition, could not be impaired or taken away by the subsequent amendment and repeal of the act, we deem it unnecessary to consider whether the various steps in council and before municipal board, with respect to a street improvement, constitute a pending proceeding within, the meaning of Sec. 79 [Lan. 98] Rev. Stat., which could not be affected, by such repeal or amendment of the law.” They are not saying what would be the effect of Rev. Stat. 79 (Lan. 98) upon the improvement ordinance or upon the various steps in council and before the municipal board with respect to the street improvement; they are including them all in their catagory in making this query, or in leaving this question open for future consideration. And then it is added:

“But we may refer to the case Raymond v. Cleveland, 42 Ohio St. 522, in which it is held, upon forcible reasoning, that the successive steps to make an assessment or reassessment for a street improvement, constitute a proceeding within the following saving clause of Sec. 1539 Rev. Stat.” A section which, as will be observed, is analogous to Rev. Stat. 79 (Lan. 98), applicable to all amendatory or repealing acts of the legislature. This is the language of original Rev. Stat. 1539 (see Lan. 3097; B. 1536-910), quoted by the Supreme Court:

“No suit, prosecution, or proceeding shall be in any manner affected by such change, but the same shall stand or proceed as 'if no such change had been made.” We are unable to see any substantial distinction between that provision in the act then in force, applied by the Supreme Court to Cincinnati v. Seasongood, supra, and the general act remaining in force, Rev. Stat. 79 (Lan. 98), which is applicable not only to these municipal proceedings, but to all other proceedings, actions and prosecutions.

Referring to the case of Raymond v. Cleveland, 42 Ohio St. 522, cited approvingly in Cincinnati v. Seasongood, supra, we have in the syllabus this language, after stating what proceedings were taken for the improvement, by the. city council:

“Held, that the various steps in council and before the boards, with respect to such street improvement, constituted a proceeding, within the meaning of the above provision, and hence council was empowered to reassess pursuant to the municipal code of 1869, Secs. 551, 552.” The reference was to the provision in the revised municipal code of 1878 by which the general laws then in force were repealed, and which act contained a saving clause:

“No suit, prosecution or proceeding shall be in any manner affected by such change, but the same shall stand or proceed as if no such change had been made. ’ ’ It was the original act passed before the amendment which provided that the special tax could be levied and assessed and reassessed.

On page 529, the judge speaking for the court, says:

‘ ‘ Counsel for plaintiffs in error, contend that the provision has relation to vested and property rights, pending actions, proceedings in-the nature of actions, and the like, and does not extend to or embrace-the right to make such an assessment or reassessment. But we are unwilling to place any such limitation upon the provision. It is remedial,, and no violence is done to the language by holding that it preserves the right to make this reassessment under the municipal code of 1869. With, respect to vested rights no saving was necessary.” Just as held in the other case to which I have referred, where the Supreme Court apply the constitutional provision which protects vested rights, by providing that the legislature shall not pass retroactive laws.

“If the word ‘proceeding,’ where it occurred in statutes relating to-practice, has in one or two instances received a construction which seemed to limit it to litigation in the nature of a suit, that affords no justification for giving to the word such restricted meaning where it occurs in a provision relating to matters in fieri under a municipal code-. See Lafferty v. Shinn, 38 Ohio St. 46, and eases cited. We think the-saving has peculiar reference to matters like that involved here.”

A later case is Cincinnati v. Davis, 58 Ohio St. 225 [50 N. E. Rep. 918], decided in 1898, some time subsequent, I believe, to the holding in Shehan v. Cincinnati, supra, and its affirmance without report by the Supreme Court. I read from the syllabus:

“Where a resolution, declaring the necessity of the improvement, of an alley, is made by the proper board of a city, at the time the resolution is adopted, the subsequent amendment of the law, whereby the making of such improvements as to alleys of a certain width, is conferred' on another board, does not work a discontinuance of the pending proceeding, though it be of such an alley; and the improvement should be-prosecuted to completion by the board that adopted the resolution, unless otherwise expressly provided in the amendment. Cincinnati v. Seasongood, 46 Ohio St. 296 [21 N. E. Rep. 630], distinguished.” On page 233, as part of the statement of facts, I read:

“By its resolution and the notices served on the property owners, the proceeding for the improvement of the alley named was commenced and the board of legislation acquired jurisdiction of the proceeding for the construction of the improvement.” And a little later on the page, we have this language:

“So that at the passage of the law, March 30, 1893, conferring on the board of administration the improvement of alleys of the width of twenty feet or less, the improvement was a pending proceeding.”- Here is a distinct expression by Judge Minshall, announcing the opinion, that the proceeding was pending at the time of the passage of the resolution declaring the necessity of the improvement. He says:

“The question then arises whether the assessments are void, because the ordinance to improve, adopted June 20, 1893, was adopted by the board of legislation, instead of by the board of administration; or, whether, by the amendment of March 30, 1893, the proceeding did not abate for the want of jurisdiction in the board, before which it was commenced, to make it? We think not. The act of March 30, 1893, contained no express provision making it apply to pending proceedings. Hence, as we think, this proceeding was not discontinued thereby, and the board of legislation was authorized under See. 79 [Lan. 98] Rev. Stat. to proceed with and complete the improvement as it did. This section relates to no particular subject of legislation. It relates to the operation of statutes in general.”

Further, on page 234, he says:

“The section as first adopted did not contain the second clause as to repeals or amendments affecting the remedy; but as there was a disposition to hold that it did not apply to such changes in the law, this clause was inserted, so that a repeal or amendment affecting the remedy should not apply to pending proceedings, ‘unless so expressed;’ so that the amendment of March 30, 1893, does not apply to this case, if it is within the provisions of the above section, whether it relates to the remedy or not, for the amendment contains no express provision to that effect. ’ ’

As already stated, the act of April 21, 1904, the amendatory act under consideration in the'case at bar, .contains no express provision that it shall be applicable to pending proceedings.

The court further says:

“There seems to be the same reason for applying the provisions of this section to a pending proceeding for the improvement of a road or street that there is for its application to a pending proceeding in the nature of a suit, where the change in the law simply applies to the mode of procedure. In either case it must be assumed that the proceeding was' commenced with reference to the provisions of the existing law; and it. is neither wise nor just, as a general rule, to disappoint the parties in this regard by a change of the law, and, as must frequently happen, . after a considerable amount of costs and expenses have been incurred. ’ ’

Now we have the two cases to which reference has been made: one holding that the legislature has no power by an amendment to affect or change vested rights by reason of-’an inhibition in the constitution of the state, (and it may be remarked that Rev. Stat. 79 [Lan. 98], applies to vested canses of action, as well as to the form of action, as well to rights as to remedies) ; and Cincinnati v. Davis, supra, in which it is held that the statute applies to attempted changes in the remedy, in the method or mode of collecting assessments, or of making the improvements, establishing them, and providing for their construction.

In the argument before us, another case, that of Union Co. (Comrs.) v. Greene, 40 Ohio St. 318, was cited as substantially holding that proceedings of the council are not pending proceedings within the meaning of Rev. Stat. 79 (Lan. 98). But Judge Minshall in Cincinnati v. Davis, supra, says, on page 235:

“In so far as Commissioners v. Greene, 40 Ohio St. 318, conflicts with this view it is not approved. In Raymond v. Cleveland, 42 Ohio St. 522, a more correct view is taken of a clause similar to the provisions of Sec. 79 [Lan. 98] Rev. Stat.” It will be recalled that the judge in that ease quoted a section of the Revised Statutes, applying it to the case which he was considering, which in my comment upon it, I have said was not to be distinguished in substance from Rev. Stat. 79 (Lan. 98), applicable to all legislation amendatory in its character. The judge rendering the opinion in Cincinnati v. Davis, supra, speaks of the act referred to in Raymond v. Cleveland, supra, as similar in its provisions to Rev. Stat. 79 (Lan. 98). Reference is made by Judge Minshall on page 236 to both Cincinnati v. Seasongood and Shehan v. Cincinnati, supra, upon which so much reliance is placed by counsel for the city. He says:

“But it is claimed, however, that the case of Cincinnati v. Seasongood, 46 Ohio St. 296 [21 N. E. Rep. 630], requires a different ruling. We do not think so. There, after the adoption of the ordinance to improve, a change was made, not in the mode of procedure but in the measure of assessment that might be made on the lots of such owners as abutted lengthwise on the improvement. By the statute in force at the adoption of the ordinance such lots were to be assessed according to the average depth of lots in the neighborhood. By an amendment subsequent to the adoption of the ordinance, this reasonable provision was stricken out, and such lots were required to be- assessed for the full number of feet they abutted on the improvement. It was claimed that these lots should be assessed according to the amendment. But the court, observing that the parties had acted with reference to the law in force at the time the improvement ordinance was adopted, held that the assessment should be made according to the statute then in force and not according to the subsequent amendment.”

It will be recalled that in the proceeding considered in Cincinnati v. Seasongood, supra, as I have already said, the amending statute intervened. between the improvement ordinance and the assessing ordinance, and all that the court was called upon to decide was as to whether the amendatory law providing for a different limitation of assessment, would apply to an improvement which had already been provided for by both resolution and the preliminary ordinance for the improvement.

The judge continues:

“The same view was taken in Shehan v. Cincinnati, affirmed by this court, and reported by the trial judge in 11 Dec. Re. 198 (25 Bull. 212). In this case the assessment was made according to the amended law, because it was in force at the adoption of the improvement ordinance, and the parties had an opportunity to terminate the proceeding before this ordinance was adopted, and, not having done so, are presumed to have assented to that mode of assessment. ’ ’ Here was a case where the improvement was made upon petition of property owners and where they had some power over the proceeding; a proceeding which they might have terminated at any time when the mode or extent of the assessment was changed. Judge Minshall further says:

“Manifestly the case of Cincinnati v. Seasongood, is not decisive of the question here. It, and the subsequent case, simply decide that the parties to a street improvement may put an end to it at any time before the improvement ordinance is made, and that no change can be made by statute in the rate of assessment fixed by statute at the time that ordinance was adopted. This, however, is not a determination that the board before which the proceeding was commenced had no jurisdiction of the improvement prior to that time, or that the proceeding was not a pending one. The parties to a^suit may dismiss it at any time after the court has acquired jurisdiction by its commencement. ’ ’ So,,in the court of common pleas,''a party may, long after a proceeding has become a pending one, dismiss it without prejudice to another action-Parties have a certain control over the proceeding, and the Supreme Court here is recognizing a like control in the petitioners for a public-improvement. .

But in the ease at bar, we have no petitioners for the improvement.. The proceeding takes its inception from the resolution of the council without any preliminary act or any invoking of the powers of the council by the people who are to be affected thereby. The judge continues,' page 237:

‘ ‘ The right to dismiss does not imply that the court has no jurisdiction; in fact the power to-dismiss implies that the court has acquired; jurisdiction of the parties and the subject of the action. In the case before us the‘proceeding was not put an end to by the parties on the adoption of the act of March 30, 1893. On the contrary it progressed before, the board of - legislation until it was completed. And as the change in the law did not affect pending proceedings-of the kind, the assessments made for the payment of the costs and expense of the improvement are valid and cannot be enjoined.”

These assessments, it will be remembered, were made by the board which had jurisdiction before the amendatory act was passed.

Another ease, Squier v. Cincinnati, 3 Circ. Dec. 196 (5 R. 400), is perhaps more clearly in point upon the controversy now before us than any of these adjudications in the Supreme Court. The recital of facts shows that H, the owner of lots abutting on an avenue in the city of Cincinnati, while in Denver, Colorado, on March 11, 1887, signed a petition to the board of public affairs, asking in the usual form for an improvement of said avenue in a certain manner, and a like petition signed by more than three-fourths of i the owners of property abutting on such avenue had prior thereto on January 14, 1887, been presented to such board; and on its recommendation the council of such city had prior to March 11, 1887, passed a resolution declaring it necessary to improve said avenue in accordance with the prayer of such petitioners. A few days after March 11, 1887, the petition of H was left at the office of said board and placed with the other papers relating to the improvement'. Afterwards, namely on May 13, 1887, the council, on recommendation of the board passed an ordinance providing for the improvement. On August 3, 1888, the assessing ordinance was passed. On September 30, 1887, nearly a year before the assessing ordinance was passed, H conveyed his lot to S; the plaintiff, who had no knowledge of the signing of the petition of H. The assessment on these lots was for more than 25 per cent of their'value, and one’of them was a corner lot, and if the assessment was to be governed by the law in force prior to March 11, 1887, it should have been assessed for only 41.34 feet, instead of 135 feet as was done: Held,

1. “That H having signed the petition for the improvement which in effect waived the benefit of the 25 per cent provision which he otherwise might have claimed, and such petition’ having been placed with the papers in the case, before the board recommended the passage of the ordinance to improve, it should be presumed that the board acted on the faith thereof, and the subsequent grantee of H cannot have the benefit of such 25 per cent provision. ”

2. “Such petitions having been filed and acted upon by the board and council, prior to March 11, 1887, this initiated a proceeding for such improvement — and the section of the statute regulating assessments having been amended March 11, 1887, such amendment under the provisions of Sec. 79 [Lan. 98], Rev. Stat., did not affect such pending proceeding, but the assessment, on such corner lot should have been made in conformity with the provisions of the section as it stood prior to March 11, 1887, at the time of the improvement ordinance.” On the bottom of page 197, 198, Judge Smith says:

“The assessment on each of the lots exceeds 25 per cent of the value thereof. The question is, whether the excess of the assessment over 25 per cent of the value should be enjoined.”
“Under the decision of the Supreme Court in Cincinnati v. Seasongood, 46 Ohio St. 296 [21 N. E. Rep. 630], the general principle is laid down that the assessment to pay for a street improvement must be under, and be governed by, the law in force at the time of the passage of the improvement ordinance. As the improvement ordinance in this ease was passed on May 13, 1887, which was after the taking effect of the law of March 11, 1887, it would follow that the assessment would be under this law, unless Sec. 79 [Lan. 98] Rev. Stat., changes the rule. This section provides that ‘whether a statute is repealed or amended, such repeal or amendment shall in no manner affect pending actions, prosecutions or proceedings, civil or criminal, and when the repeal or amendment relates to the remedy, it shall not affect pending actions, prosecutions or proceedings, unless so expressed.’ If this act of March 11, 1887, relates merely to the remedy, it is manifest that it does not in any way, express or implied, provide that it shall apply to pending proceedings.”

It is the judgment of this court upon both principle and authority that from the adoption of the preliminary resolution for the paving improvement mentioned in this petition, the proceeding was a pending one and that, as the act of April 21, 1904, contained no express provision that it should have application to pending proceedings. The limitation of assessments existing at the time of the amendatory enactment, is the limitation which should apply to these improvements; that the owners cannot be assessed to pay therefor beyond that limitation, to wit, 33 per cent of the tax value of the property, and we so hold. It is our view that the court of common pleas did not err in overruling the demurrer to the petition, and the judgment of the court of common pleas will therefore be affirmed at the costs of the plaintiff in error

Parker and Haynes, JJ., concur.