Appeal from decree of Court of Common Pleas, Trial Division, of Philadelphia, May T., 1968, No. 1331, in case of Esther E. Weber v. City of Philadelphia.
William F. Sullivan, Jr., with him Obermayer, Rebmann, Maxwell & Hippel, for appellant.
Matthew W. Bullock, Jr., Second Deputy City Solicitor, with him John B. Day, Assistant City Solicitor, and Edward G. Bauer, Jr., City Solicitor, for City of Philadelphia, appellee.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Jones. Dissenting Opinion by Mr. Justice Roberts.
This appeal challenges the right of the City of Philadelphia (City) to reject all the bids submitted by seven bidders for the operation of a "General Concession" (excluding a so-called Stadium Club and Restaurant) at the Philadelphia sports stadium now under construction.*fn1
Some time in 1965, in connection with plans for its proposed new sports stadium, the City undertook the preparation of specifications for bids for a "General Concession" contract and, in 1967, circulated to potential and prospective bidders the specifications upon which bids for such contract were to be submitted. Sealed bids were received and opened by the City on February 14, 1968. The highest bidder was Nilon Brothers Enterprises (Nilon) whose bid was to pay forty-three and nine-tenths per cent (43.9%) of the gross receipts from "General Concession" to the City. On May 3, 1968, the City's "Stadium Committee" recommended that "all bids be rejected and that new specifications be drawn up," assigning for its recommendation, inter alia, four separate reasons. The Procurement Commissioner, Mr. Winter, acting on behalf of the City, rejected all the bids.
On May 21, 1969, Esther Weber*fn2 instituted an action
in equity in the Court of Common Pleas of Philadelphia County against the City and certain of its officials, seeking to enjoin them from further advertising for bids and to require them either (a) to award the contract to Nilon, (b) to award the contract to the highest qualified bidder as of February 14, 1968, or (c) to revoke the decision to reject all bids and to make a new decision based upon proper factors. After hearing voluminous testimony, the court below dismissed the complaint and entered a decree nisi in favor of the City and its named officials and against Esther Weber. After entry of a final decree by a court en banc, the present appeal was taken.
Although the complaint in equity, in substance, averred that the City and its officials had rejected all the bids as the result of fraud, collusion and arbitrary and capricious actions, the instant record demonstrates not even a scintilla of evidence that the said officials acted either fraudulently or collusively in rejection of all the bids. The unanimous conclusion of the court below was "that the rejection of the bids involved no fraud or collusion," and such conclusion is fully justified by the evidence of record. In fact, one of the owners of Nilon -- the real party in interest in this proceeding -- conceded the absence of any fraud or collusion and stated that, in his view, the City's decision to reject all bids was arrived at in good faith; his objection to the bid rejection was that it was "uninformed" and illogical.
The crux of the present controversy is whether the decision of the City to reject all bids was arrived at in
an arbitrary and capricious manner and contrary to "the interest of the City."
In this area of the law, certain principles are well settled and stem, in large measure, from judicial respect for the doctrine of separation of powers in government. First, it is to be presumed that municipal officers properly act for the public good (Robinson v. Philadelphia, 400 Pa. 80, 86, 161 A.2d 1, 5 (1960); Hyam v. Upper Montgomery Joint Authority, 399 Pa. 446, 457, 160 A.2d 539, 545 (1960)). Second, courts will not sit in review of municipal actions involving discretion, in the absence of proof of fraud, collusion, bad faith or arbitrary action equating an abuse of discretion (Blumenschein v. Pittsburgh Housing Authority, 379 Pa. 566, 572, 109 A.2d 331, 334-35 (1954); Hyam, supra, 399 Pa. at 457, 160 A.2d at 545). Third, on judicial review, courts, absent proof of fraud, collusion, bad faith or abuse of power, do not inquire into the wisdom of municipal actions and judicial discretion should not be substituted for administrative discretion (Goodman Appeal, 425 Pa. 23, 30, 227 A.2d 816, 820 (1967); Parker v. Philadelphia, 391 Pa. 242, 249, 137 A.2d 343, 347 (1958)). Fourth, if a municipality, in connection with competitive bidding, is empowered to do so, it may reject any and all bids in the absence of fraud, collusion, bad faith or arbitrary action (Highway Express Lines, Inc. v. Winter, 414 Pa. 340, 345, 200 A.2d 300, 302 (1964); R. S. Noonan, Inc. v. York School District, 400 Pa. 391, 396, 162 A.2d 623, 626 (1960); Straw v. Williamsport, 286 Pa. 41, 43, 132 A. 804, 805 (1926); American Pavement Co. v. Wagner, 139 Pa. 623, 630-31, 21 A. 160, 161 (1891)). Fifth, the requirement of competitive bidding for municipal contracts guards against "favoritism, improvidence, extravagance, fraud and corruption in the awarding of municipal contracts, and to secure the best work or supplies at the lowest price practicable . . . ." (Yohe Page 184} v. Lower Burrell, 418 Pa. 23, 28, 208 A.2d 847, 850 (1965); Price v. Philadelphia Parking Authority, 422 Pa. 317, 332, 221 A.2d 138, 146 (1966)).
The Philadelphia Home Rule Charter, § 8-200(2)(b), provides: "Bids shall publicly be opened and tabulated in the presence of a representative of the City Controller at the time specified for their opening. The Department may reject all bids if it shall deem it in the interest of the City so to do. Otherwise the contract shall be awarded to the lowest responsible bidder . . . ." (Emphasis added) As we read this Charter provision, the City, in competitive bidding, is authorized and empowered to reject all bids subject only to the limitation that such rejection be "in the interest of the City," and the determination of that question is placed, at least initially, in the judgment not of the courts but of the City, for the Charter states "if it [the City] shall deem" the rejection "in the interest of the City."*fn3 The specifications, in response to which the instant bids were submitted, provide as follows: "The Procurement Commissioner of the City of Philadelphia reserves the right to reject any and all ...