City of Oakland v. California Construction Co.

EDMONDS, J.

The question for decision concerns the right of the City of Oakland to recover the proceeds of a street improvement contract. In each of the two cases which have been consolidated upon appeal, a demurrer was sustained without leave to amend, and the appeals are from the judgments which followed those orders.

In 1928, the respondent, a paving contractor, was awarded two contracts for street work to be done under the provisions

[575]

of the Improvement Act of 1911. (Stats. 1911, p. 730.) One complaint is based upon the contract for Greenly Drive, the other upon that for Columbian Drive, but except for the particular terms of these contracts, the same facts are pleaded in each case. By separate counts, the city alleges that the contract sued upon is void because a member of the city council which awarded it ivas in the employ of the respondent, the respondent secured it upon false representations, and the work was obtained as the result of a conspiracy among certain paving companies, including the respondent, to control the street work of the City of Oakland by refraining from competitive bidding.

According to the allegations of the complaint, “for a long time prior and subsequent” to the confirmation of the street superintendent’s assessment for the work, Eugene K. Sturgis, a commissioner of the City of Oakland, and as such a member of the city council, was in the employ of the respondent as an attorney. In that capacity he rendered legal services to the respondent with reference to this street proceeding, his compensation being a percentage of the total cost of the work to be performed under the contract. According to the city’s allegations, because of his interest in the assessments levied and bonds issued pursuant thereto, the confirmation of such assessments is void.

In support of its second count, the appellant pleads that, for the purpose of securing the contract, the respondent made false and fraudulent representations to the effect that it would ■ perform the work and furnish the materials according to the specifications, but that it had no intention of doing so. Continuing these charges, the city alleges that during the time the paving was being put in, one of its paving inspectors, who was assigned to inspect the work performed by the respondent, ivas carried upon the contractor’s payroll. As a result of the “fraudulent and corrupt” acts of the respondent and this inspector, and in furtherance of its “fraudulent intention”, it did not perform the work as it had agreed to do. More specifically, the city asserts, the contractor poured too much concrete each day for producing pavement with the proper finish, maintained a force of incompetent workmen and finishers, neglected to mix the concrete properly, used defective material in the gutters, and in various other respects did the work in an improper manner.