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Hertz Drive-Ur-Self System, Inc. v. Tucson Airport Authority

Supreme Court of Arizona

July 16, 1956

HERTZ DRIVE-UR-SELF SYSTEM, Inc., of Colorado, a corporation, Appellant.
v.
TUCSON AIRPORT AUTHORITY, a civic or municipal corporation; R. W. F. Schmidt, as manager of; and L. P. Hermes; Fred R. Stofft; J. B. O'Dowd; Louis J. Feliz; B. J. Kemp; Leon Levy; Lew Place; William Small; Patrick M. Tidmarsh; as directors of the said Tucson Airport Authority, Defendant-Appellees. AAA Auto Rental of Tucson, Inc., an Arizona corporation, Intervener-Appellee.

[81 Ariz. 81] Udall & Udall, Tucson, Robert & Price, Phoenix, for appellant.

Boyle, Bilby, Thompson & Shoenhair, Tucson, for defendant-appellees.

Jack C. Cavness, Phoenix, for intervener-appellee.

PER CURIAM.

This action in mandamus was commenced against the Tucson Airport Authority and others to compel the cancellation of an automobile rental franchise awarded to intervener-appellee and further to compel the awarding of such franchise to appellant. The defendant Tucson Airport Authority is a non-profit corporation organized under the laws of Arizona. By virtue of the

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power conferred by Chapter 48, A.C.A., 1939, as enacted and amended (now A.R.S. § 2-101 et seq.), and agreeably with the apparent legislative purpose, the City of Tucson leased to said corporation for a long term and upon a nominal rental its airport by which the premises and all of its appurtenances are put in the complete charge of the said non-profit corporation. The provisions of the lease, with the exception of one subject which will be stated, are of no immediate interest in connection with this litigation. Under this business arrangement the Airport Authority has operated and had the full control of the Tucson airport, managing it in no way different from the manner in which any like property would be managed by an owner, the great distinction however being that all revenues, income and gains are held, received and paid for the benefit of the city. The non-profit corporation in every way acts as the arm of the city in the operation of the Airport. One of the individual defendants is the executive manager of the corporation. The others constitute its Board of Directors.

The lease of the airport property executed by the City of Tucson to the corporation contains this clause, viz.:

'7. Expenditures in Excess of Twenty-five Hundred Dollars.

'In the erection, improvement and repair of all buildings, structures, works, runways, improvements, fixtures and personal property, and in furnishing supplies and materials for same or for any other use by the Authority, when the expenditure required exceeds the sum of twenty-five hundred dollars ($2500.00), the Authority shall advertise for bids for the work contemplated and for furnishing such supplies and materials, and ask for sealed proposals. [81 Ariz. 82] Any such contract shall be let to the lowest responsible bidder. The Authority may, however, reject any and all bids submitted any may re-advertise for bids.'

A part, and no doubt an essential part, of the service rendered to the patrons making use of the airport facilities is to furnish cars for rent in which they may drive away from the Airport and return to it for departure when their missions are ended. Experience has demonstrated that a monopoly service is required that there may be order and docorum when many passengers arrive to be served and that such cars may be present and ready to serve even in the contingency that no customer be present at the landing of any given flight. For some period of time prior to the spring months of 1953 this monopoly privilege had been held by the intervener corporation as a licensee of the Airport Authority. The date of expiration of the license so granted as fixed by its terms was November 30, 1953.

By word of mouth only, and informally, by such procedures as to mention the subject to reporters of the press and to others, the manager of the Authority let it be known in the spring of 1953 that the Authority would receive bids for this monopoly license. In no other way was the subject broached to the public. There were no specifications; there was no advertisement; no more than an expression that the Authority was interested to receive offers and that it would consider them on June 30.

A sealed offer was submitted by the plaintiff. A sealed offer was at some unspecified date submitted, and later withdrawn by the intervener, which afterwards substituted for it another sealed offer. These two offers, being the only ones received, were opened on June 30. Plaintiff's offer has been preserved. Intervener's offer has in some way been lost, and a copy also lost. Its precise terms have not been established; but in negotiations carried on between the officers of the Authority and those of the intervener a new contract was made whereby the franchise was given to intervener for a period of three years upon conditions of which the most salient are these:

That it would pay for the franchise the monthly sum of $375, or 10% of its gross monthly car rentals, whichever should be more; that it would provide a minimum

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fleet of 30 cars, and as many more as required, to meet the demand at the Airport; that the Authority should have the option to terminate the contract upon 60 days' notice if in its sole judgment such should be necessary in the operation and management of the airport.

The plaintiff's offer was to pay for the exclusive franchise the monthly sum of $450, or 12 1/2% of its gross revenue from the airport service, whichever should be [81 Ariz. 83] greater; adding, however, this clause: 'In computing gross revenue, damage and conversion cost, if any, is to be excluded.' The offer was further to keep available at the airport at ...


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