HAGUE v. CLEARY (1935)

This appeal calls for the construction of a particular section of the charter of the city and county of San Francisco, and certain ordinances thereof with respect to the letting of bids for the construction of a public building, as will fully appear in the development of the decision. $The petition for a hearing by this court was granted because we were unable to agree with the construction placed by the District Court of Appeal, First District, Division 2, Nourse, P. J., upon section 98, charter of the city and county of San Francisco, herein fully set forth, to the effect that ‘there is nothing in the charter section which would justify a distinction between the purchase of standard articles and materials specially manufactured,’ relying upon Neal Publishing Co. v. Rolph, 169 Cal. 190, 146 P. 659.

On all other questions presented for decision we are in accord with the decision of said District Court of Appeal and herewith adopt the same as the opinion and decision of this court. The particular question, as above noted, which impelled this court to grant a hearing, will be considered, together with such further added observations as may appear pertinent to the case generally, following the close of the opinion of said district court, which contains an accurate statement of the questions of fact and law involved in the controversy as follows:

The plaintiff sued to restrain the defendants from executing a contract for the construction of a public building in the city and county of San Francisco to be known as the Psychopathic building. Three causes of action were pleaded. The defendants' demurrers to the first and second causes were sustained without leave to amend and their demurrer to the third cause was overruled. They declined to answer to the third cause of action and judgment was thereupon entered dismissing the action as to the first and second causes and granting an injunction restraining the defendants from including in the contract the matters complained of in the third cause of action. The plaintiff has appealed from that portion of the judgment dismissing the first and second causes of action.

The controversy involves the construction of Ordinances No. 8995 and No. 9092 as applied to the provisions of section 98 of the municipal charter. This section is a portion of the new charter which became effective January 8, 1932. Ordinance 8995 was enacted May 22, 1931, after the charter was adopted and in contemplation of section 98. Ordinance 9092 was enacted after the effective date of the charter and became effective January 7, 1933.

The pertinent provisions of section 98 of the charter are: ‘Every contract for any public work or improvement, exclusive of purchases, to be performed at the expense of the city and county, * * * [To the foregoing we add the following from said charter: ‘Whether such work is to be done directl under contract awarded, or indirectly by or under subcontract, subpartnership, day labor, * * * or any other arrangement whatsoever * * *’] must provide: * * * That any person performing labor thereunder shall be paid not less than the highest general prevailing rate of wages in private employment for similar work; * * *

‘The board of supervisors shall have power and authority to make and enforce regulations in the premises not in conflict with the provisions hereof.’

The pertinent provisions of ordinance 8995 are: ‘Every contract for any public work or improvement to be performed within the State of California at the expense of the City and County * * * must provide, * * * that any person performing labor in the State of California, in the execution of such contract, * * * shall be paid not less than the highest general prevailing rate of wages in private emloyment for similar work in the City and County of San Francisco.’ Provision is then made for the assembling of data by the civil service commission upon which the board of supervisors shall semiannually fix and determine the highest prevailing rate of wages, which scale of wages shall be included in every public contract covered by the ordinance. Pursuant to this ordinance, resolutions were duly passed by the board of supervisors fixing the scale of wages for the purposes of the ordinance. Resolution No. 574 was passed January 5, 1933. Notice inviting sealed proposals for the contemplated building was first published January 12, 1933. An addenda to the invitation for proposals recited that the contract should include the stipulation that wages for labor performed thereunder should be in accord with the scale thus approved.

The basis of the first cause of action is that the ordinance under which a definite scale of wages was fixed is in conflict with the terms of section 98 of the charter and that for this reason it was repealed by the provisions of section 2 of the charter which declared that all ordinances or resolutions ‘not inconsistent therewith shall continue in force until amended or repealed.’ The point is not sound because the ordinance is not inconsistent with the provisions of the charter as will hereafter appear. The appellant professes to find an inconsistency in this: The charter provides, ‘Every contract for any public work or improvement, * * *’ whereas the ordinance provides, ‘Every contract for any public work or improvement to be performed within the State of California. * * * The board of supervisors is expressly authorized to make and enforce regulations to carry out the provisions of the section. There can be no objection to any one ordinance that it does not provide everything necessary to carry out every provision of the section of the charter. It was competent and consistent with the provisions of the charter for the board to provide by ordinance regulations covering city contracts to be performed within the state. As the contract which is subject of this litigation is one to be performed within the state and within the city and county, the appellant is not concerned with what might occur if some other contract to be performed outside the state should be contemplated.

A similar attack is made upon the language of the ordinance declaring that labor under such contracts shall be paid not less than the highest prevailing rate of wages in private employment for similar work ‘in the City and County of San Francisco.’ It is argued that this is in conflict with the terms of the charter which require with the terms of the charter which private employment for similar work. Since the contract is to be performed in the city and county of San Francisco, the prevailing rate of wages in that locality would be the rate applicable under the charter and this would be true under the ordinance as well if the words ‘in the City and County of San Francisco’ were omitted. Thus, what interpretation may be placed on these provisions of the ordinance, if a contract were to be performed by the city and county wholly outside its boundaries, is a question not before us in this litigation.

A general attack is made upon the purposes of the ordinance which calls for semiannual fixing of the wage scale. It is said in argument that because of the changed conditions in the economic world, prevailing wages may change from the scale fixed by the board of supervisors so that in some cases a contract executed in the terms of the ordinance might not reflect the prevailing wages at the time of its execution. Academically, the argument has merit, but the point does not arise here because the complaint does not allege that such conditions existed or were apt to exist in the execution of the contract in litigation.

The brief of the industrial association of San Francisco and of the San Francisco chamber of commerce, appearing as amici curiae in support of the appellant, is confined to the attack made in the first cause of action. The whole argument in this brief is based upon the untenable theory that because the charter provides that these public contracts shall require that labor thereunder shall be paid ‘not less than’ the highest general prevailing rate, therefore any ordinance or any contract executed thereunder which provides for payment of labor more than the highest prevailing rate is in violation of the charter section. On this premise it is argued that the charter section was enacted for the benefit of the taxpayers and that they were thereby guaranteed that no such public contract would call for the payment of labor upon a scale higher than that prevailing in private employment. In the interpretation of a statute, we must give force to every expression used. If it had been the intention of the charter framers to prohibit the payment of wages on public work above the prevailing rate paid in private employment, they would have either used some expression to convey that intention or would have omitted the words ‘not less than.’ As the charter reads, these words clearly convey the intention to prohibit payment less than the prevailing rate and no more. To adopt the view of amici curiae, we would have to disregard these words altogether.

We now come to a consideration of count 2, second amended complaint, which was dismissed after the entry of judgment in demurrer sustained thereto without leave to amend. The allegations of this count go to the substance of the proposition as to whether the contract for the construction of said public work, in view of the declared policy of the charter providing for the fixing of a minimum wage rate for all persons performing labor in the execution of said contract, and the further provision that ‘all laborers employed in the execution of any contract within the limits of the city and county shall have been residents thereof for a period of one year immediately preceding the date of their engagements,’ etc., should be construed as a contract of labor or a contract of sale.

The defendants, acting in their official capacity, published a notice inviting sealed proposals for the construction of a public building to be erected on said city property. The construction of a building has a very definite meaning as sued in ordinary building contracts, such as we have before us. The two outstanding items in the construction of buildings are labor and materials. The construction of a building is distinctly a task of labor. A building and the furnishings to be used for the detention of persons known as psychopathics must necessarily be specialy constructed. The psycopathic building herein was to be constructed in accordance with detailed plans and specifications on file with the department of public words. Appellant by his complaint admits that many articles which are required in the construction of said public building must be ‘specially made, manufactured and fabricated.’ The contract to be let is for a completed building. The foundation, walls, roof, doors, windows, and every item of material which is to go into the building, whether for purposes of ornamentation or strength, as provided in the plans and specifications, are part and parcel of it. The building as a whole was to be constructed for the city. We think the distinction between this case and Neal Publishing Co. v. Rolph, 169 Cal. 190, 146 P. 659, 660, is made to appear by the illustrations of the learned author, the late Chief Justice Angellotti. There an appeal was taken from a judgment directing that a writ of mandate issue on the application of the petitioner, commanding the appellant, as mayor of the city and county of San Francisco, to sign and execute a certain contract with petitioner for the furnishing of certain supplies in the way of printed blanks and forms, for use in the several departments of the city government, which contract had been awarded to the petitioner as the successful bidder for such supplies. It is noteworthy that the blanks and forms are designated in the opinion as ‘supplies.’ The board of supervisors regularly advertised for the furnishing and delivery of a required quantity of specified printed forms and blanks for the use of the various offices and departments of the municipality for the fiscal year 1913–14. Petitioner was awarded the contract. At the time he was awarded the contract he was conducting a union printing office and was entitled to use and affix to its work the label of the Allied Printing Trades Council of the city and county of San Francisco. On the day following the award, petitioner's right to the use of the label was taken away by the trades council and petitioner's establishment thereupon ceased to be a union office. Thereafter, the major, unaware aware that the petitioner's right to use the label had been revoked, approved the resolution awarding the contract to petitioner. A few days later a contract covering the items of petitioner's bid and award was presented to the mayor for his signature and he refused to sign and execute the same for two reasons: (1) That at the time of the presentation of the contract for his signature the petitioner was not entitled to the use of the label referred to, as was claimed to be required by a certain resolution of the board of supervisors; and (2) that the contract was not sufficient in form in that it did not contain the express provisions as to hours of labor and as to the minimum wages of labor required by the terms of article II, chapter III, section 1, of the charter. The application of petitioner for the issuance of a writ of mandate compelling the mayor to affix his signature to and to execute said contract was granted, consequently the appeal.

The charter of said city and county provided that every contract to be performed by the city and county must provide that in its performance eight hours shall be the maximum hours of labor on any calendar day, and that the minimum wages of laborers employed by the contractor in the execution of his contract shall be $3 a day. Any contracts for work not complying with the provisions of said charter were declared to be null and void, etc.

The proposed contract did not contain the minimum wage nor the maximum hours of labor clause. These omissions were made the basis of the mayor's refusal to sign the contract. The decision holds that in the circumstances of that case the contract did not provide for ‘the doing of work for the city and county, within the meaning’ of the charter provision, but simply for the furnishing of certain finished articles of merchandise ‘which the contractor may have printed anywhere that he chooses.’ The charter under which Neal Publishing Co. v. Rolph was rendered read: ‘Every contract for work to be performed for the city and county must provide that in the performance of the contract, eight hours shall be the maximum,’ etc. The present charter, section 98, adopted since said decision, reads: ‘Every contract for any public work or improvement, exclusive of purchases, to be performed at the expense of the city and county or paid out of moneys deposited in the treasury, whether such work is to be done directly under contract awarded, or indirectly by or under subcontract, subpartnership, day labor, station work, piece work or any other arrangement whatsoever, must provide,’ etc. (Italics supplied.) The italicized words of the new charter are very inclusive and are very persuasive as to the breadth of the application which it was intended should be given to the charter to effect the manifest object with respect to laborers generally. The clause ‘exclusive of purchases' adds no strength whatever to appellant's contention. Doubtless said clause was added to the charter provision in order to remove any doubt that may be injected into the subject in conceivable cases of public improvement. Former Chief Justice Angellotti holds that the contract for furnishing the printing supplies was a contract to deliver completed chattels or merchandise. In such a case the contractor does not undertake to perform work for the city. A distinction is drawn in this respect between a contract or agreement for sale to a city and a contract for the doing of work therefor. It is pointed out in the one case, ‘if any work on his part is done in the way of manufacture or preparing the chattels or merchandise necessary to be sold and delivered, either personally or through employees, it is work done solely for himself, and in no proper sense for the city. His contract with the city is simply for the sale and delivery of the finished article, and until the delivery the city has no interest whatever in the property. In the other case he contracts to furnish labor or personal service directly to the city, as where he agrees to construct a building for the city for a stipulated sum, or where he agrees to grade or otherwise improve a street belonging to the city, or to perform any other work for the city.’

The author was of the view that ‘no distinction material to the question under consideration can be made between a contract or agreement for the sale of such articles as are already in existence, ready for delivery, and one for the sale of articles that must be manufactured or created to meet the demands of the contract. In neither case is there undertaken any ‘work to be performed for the city and county.’ The work done is not public work.' Here the agreement is to ‘construct a public building for the city for a stipulated sum’ at the expense of the city and county under plans and specifications calling for special designs of workmanship. The city charter as now framed provides that every contract for any public work or improvement, performed at the expense of the city and county, ‘whether such work is to be done directly under contract awarded or indirectly by or under subcontract * * * or any other arrangement whatsoever,’ must conform to the maximum hours of labor and the minimum rate of wages as therein prescribed. the bid being awarded to a general contractor, he may not by merely parceling the work out to various subcontractors who may employ workmen at a low wage and compel them to work long hours, thus defeat the evident policy of the law. The law, as it sometimes happens, may be subject to abuse by designing persons, but it is not the prerogative of courts to balance the good and the evil which may flow from legislation legally enacted and upon such a basis approve or condemn the policy of laws which bear upon the industrial life of a community.

It is admitted by the pleadings that many and various kinds of articles which will be used in the construction of said psychopathic building will be specifically made, manufactured, and fabricated for use by workmen. The rule is well settled by an early decision of this state (Flynn v. Dougherty, 91 Cal. 669, 27 P. 1080, 14 L. R. A. 230) and approved many times since, and at no time criticized, so far as we are advised, that goods or wares manufactured for the purchaser and upon his special order and not for the general market is a contract for labor, adopting the Massachusetts rule. The question in that case was whether the contract of the plaintiff ‘to cut, furnish, and deliver’ to defendant the stonework of the asylum to be built at Agnew Station, according to the plans and specifications of the architects was within the statute of frauds. Civ. Code, § 1739. ‘If the stone has been cut according to his bid and the specifications, and had not been used in the construction of the asylum, it would not have been available for other purposes, or have been salable in the general market.’ So, in the instant case the stonework, metal, woodwork, grillwork, staircase materials, doors, windows, and other things forming a part of the building are to be cut, fabricated, and designed in accordance with plans and specifications. There is no question that in cases where the article is suitable for the general trade or where one stipulates for the future sale of articles which he is habitually making, it is a contract of sale. Golden E. M. Co. v. Old Homestead Bakery, 59 Cal. App. 541, 211 P. 56; United Iron Works v. Standard Brass Casting Co., 69 Cal. App. 384, 231 P. 567, 569. Both of these cases, written many years after the Neal Publishing Company Case, expressly affirms the doctrine approved in Flynn v. Dougherty and are unquestionably authorities supporting the decision of the trial court in the instant case holding the proposed contract to be one for labor. What is said in those cases is not dicta, as that question was directly involved in the issues. It is said that the exception to the general rule exists in cases where ‘the contract calls for the manufacture of an article which is one that is manufactured and supplied to the trade generally.’ Concluding the subject, it is said: ‘The weight of authority is that a contract to manufacture a special article for a special purpose in accordance with plans furnished by the purchaser is a contract for work and labor, particularly if the article manufactured is not suitable for sale in the general market in the ordinary course of the manufacturer's business, and the purchaser furnishes the materials. See Bancroft v. San Francisco Tool Co., 120 Cal. 228, 231, 52 P. 496; Mannix v. Tryon, 152 Cal. 31, 40, 91 P. 983; Spencer v. Cone, 42 Mass. (1 Metc.) 283.’ It is true that the city does not supply the materials, but that single fact does not change the rule.

It is to be observed that Neal Publishing Co. v. Rolph, supra, makes no mention of the Flynn Case or any other California case bearing upon the question immediately under consideration. Cases decided before and since the decision of the Neal Publishing Company Case sustain the Flynn Case. It may be that the Flynn Case, falling within the class of contracts as does the instant case, to wit, the construction of a public building for a stipulated sum, and, as pointed out therein, such a contract being one of labor, it was not regarded as pertinent to the question there presented.

Counsel for appellant and amici curiae devote much argument to incongruous situations which it is claimed exist to confuse if not make it impossible to follow the construction placed upon the charter and said ordinances by respondents. It is claimed that to attempt to do so would lead to insuperable absurdities and that it is impractical to require a manufacturer paying standard rates of wages in his business to pay a different rate of wages arbitrarily fixed by the board of supervisors in the manufacture of articles which are to be used in public work; that a division of labor is the practice with most all manufacturers and no single workman products a finished product. Illustrations are carried to very remote distances to prove the harm that would befall business and industry from a regulatory standpoint, if the contentions of respondents should prevail. We are not disposed to enter into a discussion of the mechanics of the proposition and can only reply by stating that there does not appear to us to be good grounds for appellant's apprehensions. There may be, as there usually is in charter provisions and ordinances affecting the matter before us, rough edges and inconsistencies and irregularities which can be composed or ironed out by the exercise of co-operative efforts on the part of all persons upon whom the law may operate. In the instant case there should be no trouble on this score as both sides, the city and county attorney and his deputy on one side and a large number of amici curiae on the other, though viewing the questions from opposite positions, are contending for the best welfare of the city and county of San Francisco and its citizens. The questions of law being settled, there should be no trouble in applying it in such manner as to accomplish the manifest purpose of the charter.

All other material questions have been sufficiently discussed by said district court of appeal as above set forth.

Judgment affirmed.

SEAWELL, Justice.

We concur: WASTE, C. J.; THOMPSON, J.; SHENK, J.; PRESTON, J.; LANGDON, J.