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Schrey v. Allison Steel Mfg. Co.

Supreme Court of Arizona

April 6, 1953

SCHREY et al.
v.
ALLISON STEEL MFG. CO.

Page 605

[75 Ariz. 284] John W. Corbin, City Atty., Glendale, Kramer, Morrison, Roche & Perry and Burr Sutter, of Phoenix, for appellants.

Jennings, Strouss, Salmon & Trask, of Phoenix, for appellee.

WINDES, Justice.

In the year 1952, the city of Glendale, Arizona, with sufficient authority, decided to have constructed a one-million-gallon elevated steel water tank and called an election for authority to issue bonds for such purpose. Authority was given, and a call for bids was duly issued. Chicago Bridge and Iron Company, a foreign corporation qualified to do business in the state of Arizona, bid $147,450, and appellee, Allison Steel Manufacturing Company, an Arizona corporation, bid $149,865, both bidders holding contractor's licenses issued by the Arizona Registrar of Contractors. The evidence shows appellee paid state and county taxes for the years 1950 and 1951 on a plant sufficient to perform the contract. Six days after the bids were opened appellee claimed a preference under the provisions of Section 56-107, A.C.A.1939. The contract was awarded to the Chicago Bridge and Iron Company, following which appellee filed action against the [75 Ariz. 285] common council of the city of Glendale for a writ of mandamus to compel appellants to award it the contract. After trial a peremptory writ was directed to be issued as requested.

Appellants appeal and present five assignments of error, three of which challenge the constitutionality of Section 56-107, supra, and two thereof submit for decision the proposition that the awarding of the contract is governed by the provisions of Section 10-610, Cum.Supp.A.C.A.1939.

Page 606

Section 56-107 supra, so far as applicable to the problem presented reads as follows:

'Hereafter, in the letting of bids for any contract for public work to be performed on behalf of the state of Arizona, or any political subdivision thereof, and to be paid for out of public funds, * * *, bids of contractors who have not been found unsatisfactory in prior public contracts and who have paid state and county taxes within the state of Arizona for not less than two (2) successive years immediately prior to the making of said bid on a plant and equipment such as is ordinarily required for the performance of the contract for which such bid is made, or on other real or personal property in the state of Arizona equivalent in value to such plant, shall be deemed a better bid than the bid of any competing contractor who has not so paid taxes, whenever the bid of such competing contractor shall be less than five (5) per cent lower and the contractor making such bid herein provided to be deemed the better bid, shall be awarded the contract. * * *'

It is urged that this statute offends Article 2, Section 13 of the Arizona Constitution, which prohibits the enactment of any law granting any citizen or corporation other than municipal, privileges or immunities which shall not upon the same terms belong to all citizens or corporations, and that it runs contrary to Section 1 of the 14th Amendment to the Constitution of the United States which enjoins the states from abridging the privileges of citizens of the United States and requires the granting of equal protection of the laws. It will be observed that the statute under attack provides that in letting contracts for public work to be performed on behalf of the state or political subdivisions thereof, contractors who have paid state and county taxes on the plaint and equipment or other property of equivalent value for two successive years immediately prior to the making of the bid are given a five per cent advantage over contractors who have not paid such taxes. The foregoing provision of the state constitution prohibits the granting of special discriminatory privileges, whereas Section 1 of the 14th Amendment to the United States Constitution enjoins the taking away or curtailing of the privileges of citizens of the United States and requires that all be given equal protection.

[75 Ariz. 286] When an inequality appears, in order to ascertain whether the legislation in question violates these constitutional provisions it is essential to first determine what is the privilege abridged or special privilege granted which might appear to result in denying equal protection of the law. All discrimination or inequality is not forbidden. Certain privileges may be granted some and denied others under some circumstances, if they be granted or denied upon the same terms and if there exists a reasonable basis therefor. When presented with a law showing partiality, we are always inevitably led into the troublesome problem of classification. The principle involved is not that legislation may not impose special burdens or grant special privileges not imposed on or granted to others; it is that no law may do so without good reason. A principle which none can dispute is that a statute may be allowed to operate unequally between classes if it operates uniformly upon all members of a class, provided the classification is founded upon reason and is not whimsical, capricious, or arbitrary. Valley Nat. Bank of Phoenix v. Glover, 62 Ariz. 538, 159 P.2d 292.

The cases are virtually unlimited upon the question of what is or is not legitimate classification. In an effort to sustain legislation if possible, the court, disregarding matters of exclusive legislative concern such as the necessity, wisdom, propriety, or expediency of the law and looking only to the constitutional power of the lawmaking body, will attempt to discover the basis, if any, for a challenged disparity. In looking to the object of the Act, if it is found that there is a difference between the class favored and others not included therein and that such difference bears a natural and reasonable connection with the object of the Act, such Act will not be stricken down. In judging the reasonableness of the foundation for classification, if the court is in doubt as to

Page 607

whether there is or is not a reasonable basis, such doubt will be resolved in favor of the constitutionality of the law. These principles are fundamental. 12 Am.Jur., Constitutional Law, §§ 476 to 482, inclusive.

The plain object of this Act is the construction of public works and the securing of contracts therefor. It provides the method and procedure whereby public funds shall be expended for public property. It is a matter in which the public and the public only have a primary interest. It prescribes who and under what conditions this work shall be done. Appellants contend that everyone must be allowed to enter into these contracts on the same basis; that a distinction based upon the difference between a taxpaying and a nontaxpaying bidder for these public contracts exceeds legislative power. With this we cannot agree. Such a proposition necessarily rests upon the assumption that the right to contract for the performance of public works is absolute and beyond state power to limit. Generally the right to [75 Ariz. 287] contract as one wishes is entitled to constitutional protection, but this is a qualified right, and where the public interest is involved it may be restricted if there is a reasonable basis for such restriction. State v. Senatobia Blank Book & Stationery Co., 115 Miss. 254, 76 So. 258. Heim v. McCall, 239 U.S. 175, 36 S.Ct. 78, 60 L.Ed. 206.

The legislature has the right to regulate the letting of contracts for public works to be constructed by the state or its political subdivisions. State v. Senatobia Blank Book & Stationery Co., supra [115 Miss. 254, 76 So. 260], wherein the law limited the right to award printing contracts to worthy and capable printing establishments in the state actually engaged in the printing business and paying taxes thereon in the state. In holding the law constitutional, the court said:

'That the Legislature has the power to enact laws regulating the letting of contracts for its printing and that of its subdivisions is not and cannot be questioned. That the county is a ...


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